(Reuters) – Hindenburg Research said on Thursday it had no stock convoy Co (NYSE:), accusing the used car retailer of insider trading and accounting manipulation.
“Our research uncovered $800 million in loan sales to an undisclosed suspected related party, along with details about how accounting manipulation and lax underwriting fueled the reported temporary income growth,” the short seller claimed in its report.
Shares of the Tempe, Arizona-based company closed down about 1.9% on Thursday and were down 3.8% before the bell on Friday.
“The arguments in (Thursday's) report are intentionally misleading and inaccurate and have already been made multiple times by other short sellers seeking to profit from a decline in our stock price,” a Carvana spokesperson said.
The company, which once faced bankruptcy, topped analysts' estimates for third-quarter revenue when it last reported in October.
Carvana shares nearly quadrupled in 2024 after its quarterly earnings improved over the years thanks to cost-saving measures, including slowing car purchases and pausing some hiring, as it navigated a bumpy used-car market.
Demand for used cars has also improved over the past few months, which has helped retailers like Carvana.
The company embarked on an expansion spree during the pandemic to take advantage of the shortage of new vehicles at the time, but has struggled to sell units at a sufficient profit.
