Carvana Stock Crashes Today, Wiping Out All 2026 Gains—Here’s the Shocking Reason

Carvana's stock just hit a wall—and its 2026 rally vanished in a single session.

What Triggered the Plunge?

Numbers don't lie. When a high-flying stock gives back an entire year's progress in hours, something broke. The data points to a perfect storm: missed targets, shifting sentiment, and that old Wall Street favorite—over-leveraged optimism meeting reality.

The Broader Signal

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Key Takeaways

• Shares of Carvana tumbled 20% on Wednesday after short-seller Gotham City Research accused the company's largest shareholder of using his other companies to inflate the used-car seller's profits and enrich himself.
• Gotham City's report echoes accusations made by Hindenburg Research and Jim Chanos last year.
• Carvana stock rose 10,000% in the past three years thanks to the turnaround effort that short sellers say is a sham.

A lengthy runup in the price of a used-car stock got stuck at a red light today.

Shares of Carvana (CVNA) plummeted on Wednesday, recently falling 15%—they were earlier down even more—after short-seller Gotham City Research accused it of artificially inflating its profits to create the illusion of a successful turnaround and enrich its largest shareholder.

The drop erased the shares' year-to-date gains and put them on track to close at their lowest price since early December.  

Why This Matters for Carvana Investors

Carvana stock has been on a rollercoaster ride for years, losing nearly all of its value between 2021 and late 2022 before jumping more than 10,000%. In the past year, the stock has shaken off short-seller allegations and charged higher.

Gotham City Research accused Carvana of overstating its profits between 2023 and 2024 by $1 billion. Carvana reported total net income of about $550 million across those two years.

Carvana did not respond to Investopedia's request for comment in time for publication.

Gotham City alleges that Carvana has inflated its profits and margins in recent years through shadowy business dealings with companies like used-car dealer DriveTime and loan servicer Bridgecrest, both of which are owned by Ernest Garcia II, Carvana's largest individual shareholder and the father of its CEO, Ernest Garcia III. 

Related Education

Other short-sellers have accused Carvana and the Garcias of creative accounting. Hindenburg Research made similar accusations in January 2025. Legendary short-seller Jim Chanos has also accused the company of employing aggressive accounting to juice its results. 

Despite Wednesday's slump, Carvana shares are up about 10,000% since hitting an all-time low in December 2022, when the company appeared destined for bankruptcy. In 2023, Carvana implemented cost cuts and struck a deal with creditors to ease its debt burden, beginning a turnaround that culminated last month with Carvana's addition to the S&P 500.