Last year, the company was behind a stock sell-off in Indian conglomerate Adani Group which it had accused of improperly using tax havens, accusations the group had denied.
Carvana Co. has come under scrutiny from short-seller Hindenburg Research, which accused the auto retailer of engaging in questionable practices and claimed that its subprime loan portfolio poses significant risks while its growth trajectory is unsustainable.
Hindenburg, which disclosed a short position in Carvana’s stock, based its allegations on extensive research, including interviews with former employees. The firm published a report titled “Carvana: A Father-Son Accounting Grift for the Ages,” alleging that Carvana employs lax underwriting standards and uses a company owned by Ernie Garcia II, father of CEO Ernest Garcia III, to inflate results.
Following the report, Carvana’s shares fell 1.9% at market close in New York. This comes after the stock surged 284% last year, driven by optimism around improving financial results despite ongoing concerns about its debt and losses.
Carvana dismissed the allegations as recycled and baseless. “The claims in today’s report are intentionally misleading, inaccurate, and have been raised multiple times by other short sellers aiming to profit from a drop in our stock price,” a company spokeswoman said via email. She added that Carvana has been under intense scrutiny since its IPO seven years ago.
Hindenburg’s report contends that Carvana manipulates its operations to enhance its financial outcomes while concealing risks tied to its loan portfolio. These tactics, the report claims, are aimed at boosting stock prices to benefit Ernest Garcia III and his father, Ernie Garcia II.
The Garcias’ insider trading activities have drawn particular attention. According to the report, the duo sold $3.6 billion in stock between August 2020 and August 2021. Additionally, during last year’s rally, Ernie Garcia II reportedly sold another $1.4 billion worth of shares.Carvana Co. has come under scrutiny from short-seller Hindenburg Research, which accused the auto retailer of engaging in questionable practices and claimed that its subprime loan portfolio poses significant risks while its growth trajectory is unsustainable.
Hindenburg, which disclosed a short position in Carvana’s stock, based its allegations on extensive research, including interviews with former employees. The firm published a report titled “Carvana: A Father-Son Accounting Grift for the Ages,” alleging that Carvana employs lax underwriting standards and uses a company owned by Ernie Garcia II, father of CEO Ernest Garcia III, to inflate results.
Following the report, Carvana’s shares fell 1.9% at market close in New York. This comes after the stock surged 284% last year, driven by optimism around improving financial results despite ongoing concerns about its debt and losses.
Carvana dismissed the allegations as recycled and baseless. “The claims in today’s report are intentionally misleading, inaccurate, and have been raised multiple times by other short sellers aiming to profit from a drop in our stock price,” a company spokeswoman said via email. She added that Carvana has been under intense scrutiny since its IPO seven years ago.
Hindenburg’s report contends that Carvana manipulates its operations to enhance its financial outcomes while concealing risks tied to its loan portfolio. These tactics, the report claims, are aimed at boosting stock prices to benefit Ernest Garcia III and his father, Ernie Garcia II.
The Garcias’ insider trading activities have drawn particular attention. According to the report, the duo sold $3.6 billion in stock between August 2020 and August 2021. Additionally, during last year’s rally, Ernie Garcia II reportedly sold another $1.4 billion worth of shares.
