Carvana Shares Plunge 14.2% Following Short-Seller Accusations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 9h ago
0mins
Source: CNBC
- Short-Seller Allegations: Gotham City Research accused Carvana of overstating its 2023-2024 earnings by over $1 billion, claiming the company is far more dependent on related-party transactions than previously disclosed, which could undermine investor confidence.
- Financial Transparency Concerns: The short-seller published audited financials of DriveTime Automotive Group and Bridgecrest Acceptance, revealing that Carvana may rely on these companies' debt issuance and accounting irregularities, raising concerns about its financial health in the market.
- Stock Price Volatility: Carvana's stock surged from under $5 at the end of 2022 to over $477 by Tuesday, but plummeted to $410.04 on Wednesday following the allegations, marking the company's second-worst trading day in the past year, reflecting drastic shifts in market sentiment.
- Historical Context Impact: Since the bankruptcy scare in late 2022, Carvana has experienced unprecedented stock price fluctuations, and the ongoing scrutiny from short-sellers may exacerbate doubts about its future profitability, affecting its performance in the S&P 500.
Analyst Views on CVNA
Wall Street analysts forecast CVNA stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for CVNA is 475.88 USD with a low forecast of 360.00 USD and a high forecast of 550.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
18 Analyst Rating
16 Buy
2 Hold
0 Sell
Strong Buy
Current: 477.720
Low
360.00
Averages
475.88
High
550.00
Current: 477.720
Low
360.00
Averages
475.88
High
550.00
About CVNA
Carvana Co. is a holding company. The Company operates an e-commerce platform for buying and selling used cars. The Company primarily acquires used vehicle inventory directly from customers, used car auctions, and wholesale used vehicle suppliers, including retail marketplace partners. Once it acquires a vehicle, the Company leverages its in-house logistics network or a vendor to transport the vehicle to one of its inspection and reconditioning centers (IRC) or auction locations with reconditioning capabilities, at which point the vehicle enters its inventory management system. It offers a mobile-optimized Website, where prospective retail car buyers can immediately begin browsing, researching, filtering, and identifying their vehicle of choice, where it offers an annotated virtual vehicle tour, which includes a 360-degree view of the interior and exterior of the actual vehicle. The Company also offers integrated financing using its loan origination platform.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
