Carvana Stock Plummets 14% Amid Short-Seller Allegations of Financial Misrepresentation

Carvana (CVNA) shares tumbled 14.2% to $410.04 after Gotham City Research accused the online used-car retailer of overstating earnings by more than $1 billion between 2023 and 2024. The short-seller's report alleges Carvana inflated profits through transactions with DriveTime and Bridgecrest, both controlled by Ernest Garcia II, the company's largest shareholder and father of CEO Ernest Garcia III.

Carvana denied the allegations, labeling the report "inaccurate and intentionally misleading," while maintaining all related-party transactions were properly disclosed. The company reported total net income of approximately $550 million during the period in question, directly contradicting Gotham's claims.

Despite the sharp decline, Carvana's stock remains a remarkable turnaround story—soaring roughly 10,000% since December 2022 when the company faced potential bankruptcy. The allegations highlight ongoing scrutiny of corporate governance in high-growth, disruptive businesses.