Investing.com — Hindenburg Research disclosed it was short on used-car retailer Carvana Co (NYSE:CVNA). Short seller called Carvana’s turnaround a mirage adding its “research uncovered $800 million in loan sales to a suspected undisclosed related party, along with details on how accounting manipulation and lax underwriting have fueled temporary reported income growth.”
While the company was navigating bankruptcy risks in 2022 and 2023 its stock spiked 284% last year, leading to investors believing the Carvana’s worst days are behind it, Hindenburg said.
The report added that Carvana is exorbitantly valued, trading at an 845% higher sales multiple relative to online car peers CarMax (NYSE:KMX) and AutoNation (NYSE:AN), and a 754% premium on a forward earnings basis.
The company has roughly $4.8 billion in net debt and is junk-rated by ratings agencies.
Shares of Carvana were trading up more than 1% after it fell as much as 5% following the report.