For employees receiving equity compensation at Carvana, performance over the past few years has been very good to shareholders. And while that kind of growth is certainly a good problem to have, it can still create real planning complexities. When a significant portion of your net worth is tied to one company’s stock, decisions around taxes, diversification, and long-term goals can become more important than ever.
Between January 2, 2020 and December 31, 2025, Carvana’s stock rose from an opening price of about $96.95 per share to trade above $400 per share by the end of 2025, with intraday highs exceeding $470 late in the year. That amounts to roughly a 300–400% increase over the five-year period, a pace of appreciation that helps explain how employees with vested equity could see their holdings become a dominant part of their net worth.
Source MacroTrends
This isn’t a statement about Carvana’s long-term prospects or where the stock goes next. It’s an example of something advisors see frequently: when employer stock performs exceptionally well late in a career, it can quietly reshape retirement planning.
How Rapid Stock Growth Can Change Retirement Planning
For professionals who are five to ten years from retirement, earnings are often at their peak, savings have accumulated steadily and equity compensation has become a larger part of total compensation than it was earlier in their careers.
At high-growth companies like Carvana, that change can happen quickly. A relatively short period of equity grants, combined with sharp appreciation, can cause employer stock to represent a much larger share of net worth than originally intended.
Compressed wealth creation near retirement isn’t inherently bad. It simply shortens the window to make planning decisions that need to account for both near-term timing and long-term outcomes.
Why Employer Stock Is Different from Other Investments
Employer stock often looks simpler than it is. On paper, it’s just another investment decision: evaluate the risk, consider how it aligns with your broader goals and decide whether to participate. The reality is that employer stock behaves differently from other investments, and I believe concentration changes how it should be evaluated within a broader plan.
Employees are closer to the stock’s performance, hearing internal updates and seeing how decisions are made. At the same time, their paycheck comes from the same place as their equity, which means employment risk and investment risk are tied together in a way that doesn’t exist in other portfolios.
At companies like Carvana, equity compensation can take several forms over the course of an employee’s tenure. Many employees receive a mix of restricted stock units (RSUs), stock options and, in some cases, performance-based awards that vest over time. Each type comes with different timing, conditions and decision points, which can make it harder to step back and evaluate total exposure as a single picture.
Taxes add another layer. RSUs are taxed as ordinary income when they vest, while additional appreciation may be subject to capital gains later. Options and performance awards can further complicate timing and expectations around value. What appears manageable in isolation can feel less clear when multiple grants, vesting schedules and tax considerations overlap.
Why Concentrated Employer Stock Can be Riskier Near Retirement
Earlier in a career, concentration risk is often easier to live with. There’s time to earn more, time to adjust your goals and time to recover from market volatility. In 2022, a notoriously difficult year for the stock market, Carvana’s shares fell more than 90%, declining from intraday highs earlier in the year above $200 per share to an intraday low near $3 by December before rebounding sharply in subsequent years, rising more than 2,000% from those lows.
If a drawdown like this were to occur five to ten years from retirement, the consequences would be understandably unsettling. While a 90% swing in a single stock is highly unusual, it is clearly possible.
As retirement approaches, the way equity compensation is managed often needs to evolve as well. The focus typically shifts away from maximizing growth and toward reducing risk while preserving flexibility for the years ahead. Financial planning is ultimately about improving the odds of meeting your goals, and when too much of that outcome depends on a single stock, those odds can quietly deteriorate.
How Taxes Complicate Employer Stock Decisions Near Retirement
In my experience, taxes are usually the reason people hesitate to address concentration. RSUs are taxed as ordinary income when they vest, and any additional appreciation becomes a capital gains issue later. When shares have grown significantly, the tax cost of selling can feel like a reason to wait.
The problem is that waiting could introduce new complexity rather than simplifying the decision. Additional shares vest, prices fluctuate and the dollar amount at risk grows, sometimes without a clear plan guiding those changes. What starts as an effort to be tax-efficient can quietly turn into inaction driven by uncertainty.
I think a more helpful way to frame the decision is to focus on after-tax risk over the years leading into retirement, rather than trying to optimize a single tax year in isolation.
Why Employer Stock Decisions Are More Complicated Than They Appear
Employer stock decisions often look straightforward. Reducing concentration, spreading sales over time and coordinating with taxes are all reasonable objectives.
In practice, several moving parts tend to overlap at once:
- Market prices change
- Tax considerations intersect
- Vesting schedules continue
- Retirement timelines approach
When these elements aren’t viewed together, even sensible decisions can raise new questions about timing and tradeoffs. That doesn’t mean the strategy was flawed. It reflects the reality that employer stock decisions, like all financial planning, sit at the intersection of multiple variables that don’t always move neatly.
Planning doesn’t remove uncertainty. It provides context to make decisions as conditions change.
Ways to Reduce Employer Stock Concentration Without Overreacting
In my experience, addressing employer stock concentration rarely requires dramatic action. In most cases, a measured approach is more effective and easier to live with.
That could involve setting reasonable limits on how much net worth is tied to employer stock, reducing exposure gradually over time and coordinating decisions with vesting schedules, income changes and retirement timing. For some households, using appreciated shares for charitable giving can also play a role, depending on personal goals and values.
In certain situations, more technical investment and tax strategies may also be appropriate. These can include harvesting losses elsewhere in a portfolio to offset gains, gifting appreciated shares or using options-based strategies to manage risk while unwinding a position over time. The right mix depends on factors such as tax brackets, liquidity needs and overall planning objectives.
The objective isn’t to eliminate employer stock entirely. It’s to ensure that no single stock carries more responsibility for future outcomes than it reasonably should.
Why Employer Stock Concentration Isn’t Unique to Carvana
Carvana is simply a visible example. Similar dynamics appear across many Fortune 1000 companies, particularly where equity compensation plays a meaningful role and growth has been strong.
What matters isn’t the company name. It’s how quickly concentration can form and how much of the next phase of life depends on one outcome continuing to go right.
The Right Questions to Ask About Employer Stock Before Retirement
Most people approach employer stock decisions by asking whether they should sell now, but I believe a more useful starting point is to ask how much of retirement depends on a single company and what would change if timing or performance worked against them.
These aren’t market-timing questions. They’re planning questions, and they tend to be easier to answer when employer stock decisions are viewed as part of the overall retirement picture rather than in isolation.
Turning Employer Stock Success into Long-Term Retirement Stability
Employer stock can play an important role in building wealth, and that success deserves to be acknowledged. As retirement approaches, the focus naturally shifts toward durability, flexibility and confidence that future plans are not overly dependent on one variable. In my opinion, thoughtful diversification isn’t about undoing past success. It’s about making sure that success supports what comes next.
Advisory services offered through Meridian Wealth Management, LLC, a Registered Investment Advisor. Seek tax, legal, insurance, and investment advice from a licensed professional relative to your situation. The information and opinions voiced in this material are strictly for general information only and are not intended to provide any security recommendations, specific advice, or recommendations. All investing involves risk, including loss of principal. Past performance does not guarantee future results.
