Hindenburg Research claims used-car dealer Carvana's involvement in $800 million loan sales undisclosed transactions

US-based short seller Hindenburg Research on Wednesday, January 2 alleged that an online car dealer named Carvana Co. has $800 million in loan sales under a suspected undisclosed related party transaction, according to the report released on January 2. 

“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,” alleged Hindenburg Research in its report titled — “Carvana: A Father-Son Accounting Grift For The Ages.”

Share of the $44 billion company dropped nearly 5 per cent after the short seller released the report. The company's main business is to provide retail customers with an online platform to buy and sell used cars. 

Hindenburg Research Allegations:

The short seller, through its report, alleged that the research team, after conducting 49 interviews with industry experts, former Carvana employees, competitors and related parties of the company, has found that Carvana’s turnaround story is a mirage, according to the report.

Despite the company in the face of bankruptcy risks in 2022 and 2023, the stock surged 284 per cent in 2024, as per the short sellers report.

The research agency cited the Manheim Price Index and said, “Carvana’s business already faces major headwinds. Used vehicle prices have declined 20.3% in the past 3 years.” 

Highlighting the alleged insider trading claims, the short seller also flagged that the company's solvency remains at risk as insiders unload the company's stock.

“For every $1 in net income it reported, the company has added $139 in market cap – a $34 billion market cap increase,” alleged Hindenburg.

Carvana has told investors for at least 6 years that it is seeking to diversify outside of its relationship with Ally, but thus far has not announced new financing partners, alleged Hindenburg.

“We have taken a short position in shares of Carvana,” said Hindenburg Research as a disclosure in the report. 

Link to the Hindenburg Report