How do you survive a tough stretch? Stay resilient and, when your luck turns, be ready to jump at the right opportunity, according to Carvana co-founder and CEO Ernie Garcia.

Less than two years after the online used car retailer's ballooning debt and shrinking sales nearly forced the company into bankruptcy, Carvana is on the road to recovery with a current market value of $31.9 billion.

The situation got so bleak in December 2022 that Carvana's stock price had lost roughly 99% of its value from an all-time high just a year earlier. Many Wall Street investors worried the Tempe, Arizona-based company might never return to profitability.

"That's not part of the dream ... That's not something you imagine [when you start a business]," Garcia told CNBC's "Squawk on the Street" on Thursday morning.

Carvana had been riding high during the coronavirus pandemic, when the market for used cars surged. The lack of in-person shopping sent customers to online retailers, boosting Carvana's sales. But Carvana initially struggled to keep up with demand, and then its spending on aggressive expansion plans later backfired when the pandemic shutdowns ended. The company ended up owing over $5 billion.

"We made a big bet on our future and financed it with debt. Investor perspectives changed quite a bit in [2022] and our stock went down 99%," Garcia said on Thursday.

Fending off bankruptcy rumors and shareholder lawsuits was tough for Garcia. "In those moments, unfortunately, the reality is people will line up to kick you when you're down," he said. "You wake up every morning and you read the articles, you see the news."

For Garcia, who launched Carvana in 2012 and took it public five years later, the experience helped affirm two important lessons about how to get through a rough patch. 

1. Keep going

"In those moments, I think, the biggest risk is if people decide to give up," he told CNBC. "The people in Carvana came together. We did our best work."

In December 2022, Carvana's shares traded at less than $5 apiece; they had topped $370 in 2021. Garcia worked on securing deals with the company's creditors while issuing a statement assuring his customers, shareholders and employees the company was "singularly focused on executing on the plan to profitability."

Fortunately for Carvana, Garcia said on Thursday, "we had investors that stuck with us and believed in us."

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

That's where the second lesson comes in: You can't be successful with some luck.

Carvana was fortunate that its debt creditors were willing to be flexible. The company's rebound kicked off in 2023, when a group of its creditors, led by private equity firm Apollo Global Management, agreed to a deal that reduced Carvana's total debt load by more than $1.2 billion. The deal gave Carvana the flexibility to raise more funding and restructure its business, including slashing more than $1 billion from its annual expenses. 

Carvana's stock price has more than tripled since then. The business now projects record earnings for 2024, Carvana announced on Wednesday.

To get to this point, Garcia admits Carvana "caught some breaks."

"These things never happen alone …. Building anything is always a battle. It's always harder than you imagine up front," he said. "And you've got to get a little lucky along the way."

He's not alone in acknowledging the role of good fortune. Last year, Mark Cuban told GQ he couldn't imagine any billionaires who could rebuild their net worths from scratch without at least some chance. "You've got to have luck," Cuban said. "You got to have timing."

No matter how smart and talented you are, or how hard you work, you'll likely need certain elements to fall into place to succeed. That's true whether you're trying to build a profitable business or grow a successful career, according to psychology professor Richard Wiseman, author of "The Luck Factor."

You have to be ready to seize the opportunities that present themselves, though. In his book, Wiseman writes that people who regularly experience good luck tend to share certain traits, including optimism and resilience, which are exactly what Garcia said helped steer Carvana through its near-bankruptcy.

"One of our values [at Carvana] has always been, 'We're in this together,'" Garcia told CNBC. "But that's an easy thing to write on a wall. It's a hard thing to make true. In moments like that, you get tested."

This story was most recently updated on August 21, 2024.

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