Carvana’s stock price dropped after a short seller, Hindenburg Research, accused the company of selling its customer loans at low interest rates, making the company’s turnaround in 2024 appear less impressive. The firm claimed that nearly 26% of Carvana’s gross profit over the past nine months came from these loan sales.
Carvana disputed the findings, calling them “intentionally misleading” and saying they had already been made by other short sellers seeking to drive down its stock price. However, analysts remain bullish on the company, with a consensus price target of $255 representing a 28% premium over Carvana’s Thursday close.
Hindenburg Research also criticized CEO Ernie Garcia III’s father for selling large amounts of his stock during the company’s recovery period. The elder Garcia sold an estimated $4.6 billion in stock between 2020 and 2021, before the company’s share price plummeted, and another $1.4 billion over the past year.
Despite this criticism, Carvana reported strong third-quarter earnings per share (EPS) nearly triple the expectations of analysts surveyed by Visible Alpha, raising its full-year outlook. The stock still finished down almost 2% on Thursday following Hindenburg’s report.
Source: https://www.investopedia.com/carvana-stock-slips-as-short-seller-calls-its-2024-turnaround-a-mirage-8768456