Carvana (NYSE: CVNA), the Tempe-headquartered online used car retailer, is once again proving its mettle on Wall Street.
Despite a scathing short report released yesterday by “Gotham City Research,” CVNA shares are showing remarkable resilience this morning, rebounding over 15% from the initial low.
And that’s when “BFA” – a leading securities law firm has launched an investigation into Carvana for potential violations of federal regulations as well.
For seasoned investors, though, all of it feels like a familiar script.
Even with the current turbulence, Carvana stock remains up a remarkable 170% versus its 52-week low, signalling the market’s appetite for “Amazon of Cars” far outweighs the fears sown by short-sellers.
Here’s Gotham’s beef with Carvana stock
CVNA stock came into focus this week after Gotham issued a report titled “Carvana: Bridgecrest and the Undisclosed Transactions and Debts”, alleging that the firm’s financial health is an elaborate “illusion”.
The short-seller claimed Carvana has overstated its 2023–2024 earnings by over $1 billion through a complex web of related-party transactions involving “DriveTime” and “Bridgecrest” – entities controlled by the Garcia family.
According to Gotham, CVNA is effectively “intermingling” loans and using these entities to mask cash burn.
The investment research firm went as far as predicting that Carvana will be forced to “restate” its past two years of financials, and its auditor, Grant Thornton, may soon resign.
While these claims sound dire, the market’s rapid recovery suggests investors are seeing them with a healthy dose of skepticism.
The bull case: why CVNA shares remain worth owning
While bears focus on accounting technicalities, bulls are looking at the scoreboard.
Carvana’s turnaround over the past year has been nothing short of “legendary”.
The NYSE-listed firm recently reported a 55% increase in revenue and a record $637 million in adjusted EBITDA, proving its vertically integrated model is finally hitting its stride.
By controlling everything from reconditioning to financing, CVNA captures margins that regular dealers just can’t replicate.
What’s also worth mentioning is that Wall Street analysts continue to see upside in Carvana shares to as much as $600, citing industry-leading growth and a shift toward sustainable profitability.
As Needham’s senior expert Chris Pierce put it:
Carvana isn’t just selling cars; they are disrupting a trillion-dollar industry with a superior customer experience backed by real unit economics.
Carvana is used to handling short reports
Long-term investors should stick with CVNA shares as Gotham’s short report is all allegations – not evidence, at least for now.
Plus, it isn’t the company’s first rodeo with short-sellers, and it likely won’t be the last. Historically, Carvana has crushed the “short theses” through sheer operational execution.
Even from a technical perspective, Carvana bounced off a key support coinciding with its 100-day moving average (MA) on Jan. 28, signalling “buy the dip” mentality and that the broader uptrend remains intact.
All in all, with its full-year 2025 earnings release scheduled for February 18, CVNA has the perfect stage to let the numbers do the talking.
For those who have watched it rise from the ashes ($4.0 a share) to nearly $500, a short report may just be another speed bump on the road to market dominance.
The post Carvana’s stock price recovery proves the brand is stronger than any short report appeared first on Invezz
