Carvana CEO gained valuable insights from the company's 2022 financial crisis: "Luck plays a role in business success."

What is the secret to surviving a difficult period, according to Ernie Garcia, co-founder and CEO of Carvana? Stay strong and be prepared to seize the moment when your luck changes.

Despite facing financial difficulties, Carvana is now recovering from its near-bankruptcy.

In December 2022, Carvana's stock price had dropped by about 99% from its all-time high the previous year, causing concern among Wall Street investors about the company's future profitability.

Garcia stated on CNBC's "Squawk on the Street" on Thursday morning that "That's not something you envision when starting a business."

During the pandemic, Carvana experienced a surge in sales due to the increase in demand for used cars and the shift towards online shopping. However, the company faced challenges in meeting the demand and later suffered losses due to its expansion plans. As a result, Carvana ended up with a debt of over $5 billion.

Garcia stated on Thursday that we financed our big bet on our future with debt, but investor perspectives shifted significantly in 2022, resulting in a 99% decline in our stock value.

Unfortunately, when you're facing bankruptcy rumors and shareholder lawsuits, it's tough to fend them off. People will line up to kick you when you're down, and you'll wake up every morning to read the articles and see the news.

Launching Carvana in 2012 and taking it public five years later taught Garcia two important lessons about overcoming tough times.

1. Keep going

"Those moments pose the greatest danger if individuals choose to surrender," he said to CNBC. "Carvana's team collaborated and performed their best."

In December 2022, Carvana's shares were trading below $5 each, a significant decrease from their peak of $370 in 2021. Garcia worked on negotiating with the company's creditors while issuing a statement to reassure customers, shareholders, and employees that Carvana was fully committed to achieving profitability.

Fortunately, Carvana had investors who remained loyal and trusted in them, as Garcia stated on Thursday.

2. Catch some breaks—and make the most of them

Success requires more than just luck.

In 2023, Carvana was fortunate that its debt creditors, led by private equity firm Apollo Global Management, agreed to a deal that reduced the company's total debt load by more than $1.2 billion. This allowed Carvana to raise more funding and restructure its business, including slashing more than $1 billion from its annual expenses.

On Wednesday, Carvana announced that its stock price has more than tripled since then and the business now projects record earnings for 2024.

Carvana received some advantages, according to Garcia.

"Building anything is always a struggle. It's always more difficult than you anticipate initially, and you need a bit of luck to succeed."

Mark Cuban acknowledged that good fortune plays a role in rebuilding net worths, stating that billionaires need luck and timing to succeed.

Success, whether in business or career, requires certain elements to fall into place, according to psychology professor Richard Wiseman, author of "The Luck Factor."

Garcia's statement aligns with Wiseman's book, which suggests that people who frequently experience good fortune possess traits such as optimism and resilience, which helped Carvana overcome its financial difficulties.

"At Carvana, our value has always been 'We're in this together,'" Garcia said to CNBC. "However, it's easy to write this on a wall. The real test comes when we're put to the challenge."

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