New York, January 28, 2026, 14:23 (EST) — Regular session
- Carvana shares tumbled following a Gotham City Research report that raised concerns over accounting practices and related-party disclosures.
- The short seller claimed earnings for 2023-2024 were overstated by over $1 billion.
- Investors are awaiting the company’s response before the upcoming earnings report.
Shares of Carvana Co plunged roughly 19.5% to $384.57 Wednesday afternoon after short seller Gotham City Research released a report accusing the company of accounting irregularities and undisclosed related-party deals. The stock had closed Tuesday at $477.72 and fluctuated between $375.13 and $482.31 during the session. Carvana did not immediately respond to requests for comment. 1
This hit matters since Carvana has been one of the market’s most polarizing turnaround stories, with investors divided over the durability of its profits and the reliance on credit markets. A short report targeting earnings quality can quickly push fast money out, leaving questions to follow.
The timing couldn’t be worse. Carvana faces a crucial reporting period and refinancing buzz, and the stock isn’t tolerant of negative news.
Gotham’s report claims Carvana overstated its 2023-2024 earnings by over $1 billion and leaned more heavily on related parties than previously revealed. The firm pointed to DriveTime’s leverage as a key factor propping up Carvana’s adjusted EBITDA — a profit metric excluding interest, taxes, and other costs. DriveTime reportedly burned through more than $1 billion in cash over 2023 and 2024, according to financials Gotham says it obtained via the Freedom of Information Act. The report also forecasts a delayed 2025 10-K filing and potential restatements of past annual reports, highlighting auditor Grant Thornton as a possible weak link. 2
Gotham flagged “problems with accounting, disclosure, and business practices” that could trigger regulatory issues. Yet some major brokers are still optimistic: JPMorgan bumped its price target to $510 from $490 on Wednesday, maintaining an Overweight rating. Wells Fargo’s David Lantz also raised his target, from $500 to $525, keeping his Overweight call, according to notes cited by Stocktwits. 3
Carvana will release its fourth-quarter and full-year 2025 earnings after the market closes on February 18, the company announced. A conference call is set for later that evening. 4
Shares have climbed from a 2022 low near $4 to about $473 earlier this month, a surge that made the stock vulnerable to a sharp pullback if doubts surfaced. Carvana has weathered short-seller attacks before and fought back, calling itself “one of the most heavily researched public companies” while labeling the claims as “intentionally misleading and inaccurate,” the Financial Times reported. 5
Carvana goes head-to-head with used-car sellers like CarMax and a sprawling network of dealers and online sites. Yet, its approach relies heavily on financing and securitisation to push inventory out the door and bankroll customer loans. This setup means any controversy around how it records loan gains and related-party transactions remains a hot topic for shareholders.
The downside is clear. Should the short seller’s allegations trigger regulatory probes, restatements, or stricter lender and counterparty reactions, the stock could slide sharply. On the flip side, a strong refutation or clean filings without any surprises might stabilize it just as swiftly.
Traders are focusing on any corporate response and what management reveals on February 18 regarding related-party connections, loan-sale accounting, and the details behind its profit figures.
