Carvana’s shares have fallen for the second consecutive day after a short seller, Hindenburg, released a negative report about the company. The stock price has retreated by 5% so far today.
Carvana specializes in online car sales and allows consumers to purchase vehicles without physically visiting a dealership. However, critics argue that the company uses overly lenient underwriting standards for its loans, approving all loan applications submitted. Hindenburg predicted that this would weaken Carvana’s ability to sell those loans over time.
Additionally, Hindenburg alleged that Carvana improves its financial results by selling vehicles at high prices to DriveTime, an auto dealer owned by the father of its CEO. DriveTime also extends many of these deals and provides Carvana with favorable terms on extended warranties.
Carvana has denied the allegations, stating that the report’s arguments are “intentionally misleading and inaccurate” and have been previously made by other short sellers.
The company’s shares have slumped 24% in the last month but remain up 300% over the past year. While some experts believe Carvana has potential, they prioritize AI stocks that offer higher returns in a shorter time frame.
Source: https://finance.yahoo.com/news/carvana-cvna-sinks-second-day-174736351.html