Carvana Stock Plunge Erases Gains Amid Short-Seller Allegations
Carvana shares cratered 20% Wednesday after Gotham City Research accused the used-car retailer's largest shareholder of artificially inflating profits through related-party transactions. The dramatic sell-off wiped out all year-to-date gains, dragging shares to their lowest level since early December.
The short-seller's report alleges $1 billion in overstated profits during 2023-2024—nearly double Carvana's reported $550 million net income for the period. This marks the second such allegation in twelve months, following similar claims from Hindenburg Research and noted short-seller Jim Chanos in 2023.
Carvana's stock had staged a remarkable 10,000% rally over three years prior to today's plunge, a recovery now cast into doubt by the fresh allegations. The company declined to comment when contacted by Investopedia.
