Hindenburg Research has taken a short position against Carvana, alleging that the company’s recent financial turnaround is a “mirage” fueled by unstable loans and accounting manipulation. Carvana’s shares closed at $199.56, marking a 1.9% drop and the first close under $200 since October. Despite a nearly 300% stock increase in 2023, Hindenburg claims Carvana has engaged in $800 million in loan sales to a suspected undisclosed related party. The report also highlights the business relationship between CEO Ernie Garcia III and his father, Ernest Garcia II, who is Carvana’s largest shareholder. Carvana dismissed the report as “intentionally misleading and inaccurate.” Analysts from JPMorgan and BTIG have noted that many of these concerns were already known to investors. Carvana’s relationship with DriveTime, a company run by Garcia II, includes shared revenues, vehicle sales, and facility leases.
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