Hindenburg Research has reportedly initiated a short position against the used-car retailer Carvana Co. (CVNA), according to a report by Reuters.
In their report, Hindenburg disclosed findings of $800 million in loan transactions with a potentially undisclosed related entity. They also highlighted instances of accounting manipulation and lenient underwriting practices as factors temporarily boosting reported income growth.
Carvana, which was established in 2012 and is headquartered in Tempe, Arizona, operates an online platform for buying and selling used vehicles in the United States. This platform enables customers to research and select vehicles, view them with the company's 360-degree imaging technology, secure financing and warranties, complete purchases, and arrange vehicle delivery or pickup—all from their computers or mobile devices. The company also manages auction sites.
According to Hindenburg's report, their research team conducted 49 interviews involving industry experts, former employees, competitors, and related parties. They concluded that Carvana's recovery narrative is illusory.
The report further noted that Carvana faced bankruptcy risks during 2022 and 2023. Despite these obstacles, the company’s stock experienced a 284% increase in 2024, a trend that Hindenburg has closely examined and questioned.
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