On 2 January, US-based short-seller Hindenburg Research said that an online car maker called Carvana Co. has $800 million in loan sales under an undisclosed related party transaction. The Hindenburg report, “Carvana: A Father-Son Accounting Grift For The Ages,” shares how the company has tried to push its share price to a point where it added $34 billion to its value in a year. The report also says, “Our 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.”
Ever since the report, shares of the car dealer have seen a 5% slump. The company’s main business is to provide an online platform for people to buy or sell their used cars. The short seller conducted as many as 49 interviews with the car dealer’s ex-employees, competitors and industry experts to conclude that Carvana’s turnaround story is nothing more than a mirage. The short seller has said that despite being on the verge of bankruptcy in 2022 and 2023, the car dealer’s stock surged 284% in 2024. Moreover, they also pointed out that the prices of used vehicles have declined by 20.3% in the last 3 years. Recently, Hindenburg released the same report for an Indian company called Adani Enterprises, which made the short seller $4 million.
“For every $1 in net income it reported, the company has added $139 in market cap – a $34 billion market cap increase,” alleged Hindenburg. Moreover, Hindenburg has said that for the last 6 years, Canvana has told its investors that it is seeking to diversify its business portfolio but hasn’t even taken one step towards it so far.
