Why did Carvana's stock plummet?

Carvana's stock plummeted by 14.2% due to accusations from Gotham City Research that the company overstated its earnings and relies heavily on related-party businesses.

What financial irregularities does Gotham City Research allege against Carvana?

Gotham City Research alleges that Carvana overstated its 2023-2024 earnings by over $1 billion and is excessively dependent on businesses linked to the CEO's family.

What is the connection between Carvana and DriveTime/Bridgecrest?

DriveTime Automotive Group and Bridgecrest Acceptance Corp., companies owned by Carvana's CEO's father, are alleged to be crucial related parties for Carvana's financial reporting.

Home / Business and Economy / Carvana Stock Plunges on Family Ties Allegations

Carvana Stock Plunges on Family Ties Allegations

29 Jan

•

Summary

Carvana shares dropped 14.2% on Wednesday.
Short seller claims $1 billion earnings overstatement.
Allegations involve businesses linked to CEO's family.

Carvana Stock Plunges on Family Ties Allegations

Shares of Carvana experienced a sharp decline of 14.2% on Wednesday amid allegations from short-seller Gotham City Research. The research firm claims the online used car retailer, recently added to the S&P 500, has overstated its earnings for the 2023-2024 period by more than $1 billion.

Gotham City Research further alleges that Carvana's financial health is significantly dependent on businesses controlled by the family of its CEO, Ernie Garcia III. This claim is supported by financial data from DriveTime Automotive Group and Bridgecrest Acceptance Corp., both owned by Ernest Garcia II, the CEO's father and Carvana's largest shareholder. These financials were reportedly obtained via the Freedom of Information Act, though CNBC has not independently verified their authenticity.

Disclaimer: This story has been auto-aggregated and auto-summarised by a computer program. This story has not been edited or created by the Feedzop team.