Carvana shares fall 14% following short-seller accusations
A Carvana used car vending machine displays vehicles on December 9, 2022 in Miami.
Joe Raedle | Getty Images
shares to the caravan The online retailer fell 14.2% on Wednesday following accusations from short sellers that it was exaggerating its earnings with the help of businesses controlled by CEO Ernie Garcia III’s family.
Gotham City Investigation claimed on Wednesday: online used car retailer, Which one entered? S&P 500 Last month, it overstated its 2023-2024 earnings by more than $1 billion and is far more reliant on “related parties” linked to the family than previously disclosed.
Overall, the firm alleges that Carvana’s earnings were tied to DriveTime’s debt issuance, “toxic” loans and accounting irregularities.
Carvana called the report “inaccurate and intentionally misleading” in an emailed statement. The company said all “related party transactions are accurately disclosed in our financial statements.”
Carvana also confirmed plans to report 2025 earnings on February 18, after Gotham claimed the company would have to delay its annual 10K filing.
Gotham used DriveTime Automotive Group, Inc. to support its claims. and Bridgecrest Acceptance Corp. released their 2024 audited financial reports. Both companies are owned by Ernest Garcia II, Carvana’s largest shareholder and the father of the online retailer’s CEO.
Carvana stock
CNBC has not independently verified the authenticity of the financial results Gotham says it obtained through the Freedom of Information Act.
The short selling report is the latest in a series of short selling reports targeting Carvana in recent years.
Notably, defunct short seller Hindenburg Research last year disclosed a bet against Carvana, claiming the online used car retailer’s turnaround was a “mirage” fueled by unstable credit and accounting manipulation.
Carvana shares have been on an unprecedented rise for the company since a late-2022 bankruptcy scare. The stock’s price bounced from under $5 per share during that time and closed Tuesday above $477 per share.
Carvana shares closed down 14.2% at $410.04 on Wednesday; This was the company’s second-worst trading day last year.
