New York, Jan 29, 2026, 09:58 (ET) — Regular session underway.
- Carvana shares jumped roughly 8% on Thursday, rebounding from a steep decline the previous day
- Gotham City Research claimed Carvana overstated earnings by more than $1 billion due to related-party transactions; Carvana rejects the accusation
- Investors are gearing up for volatility ahead of the Feb. 18 earnings report
Carvana Co. (CVNA) shares jumped roughly 8% on Thursday, rebounding from a steep drop sparked by a short-seller report the day before. The stock climbed $31.98 to $442.02 in morning trading, following Wednesday’s close at $410.04.
Investors are weighing if the report is just a one-day shock or if its effects will stretch into earnings season. The stock’s volatility is crucial since doubts around accounting and related-party transactions usually cut deepest when confidence falters.
On Wednesday, Gotham City Research, a short seller betting against the stock, claimed Carvana overstated its 2023-2024 earnings by over $1 billion and relied more heavily on related-party transactions than revealed. Gotham also predicted delays in Carvana’s upcoming 10-K filing with the U.S. Securities and Exchange Commission and said earlier reports would be restated. 1
Carvana pushed back against the accusations, labeling the report “inaccurate and intentionally misleading.” It insisted that all related-party transactions appear clearly in its financial disclosures. The company originated within DriveTime before spinning off prior to going public, with both firms connected to the Garcia family. 2
Gotham’s report knocked Carvana’s shares down 14.2% on Wednesday, with even steeper losses earlier in the session, reigniting scrutiny over the company’s connections to DriveTime and loan-servicer Bridgecrest, according to the Financial Times. After nearly going bankrupt in 2022, Carvana pushed through cost cuts and a restructuring that had lifted its stock above $470—until this week’s setback. 3
BTIG’s Marvin Fong stuck with a Buy rating and a $535 price target, saying the harshest claims out there “are not well-founded.” He challenged the numbers linked to DriveTime’s leverage and servicing economics, per Investing.com. 4
JPMorgan lifted its price target to $510 from $490 in a quarterly preview released before the selloff, predicting a “solid beat and raise” for the fourth quarter. The bank adjusted estimates around pricing and spending and included the impact of new vehicle franchise acquisitions. 5
In other auto retail news, CarMax dropped roughly 1%, with AutoNation and Lithia Motors sliding about 3% and 2%, respectively. The divergence highlighted that Carvana’s decline stemmed from company-specific news rather than a broad sector sell-off.
The short seller’s argument also flagged a procedural risk: Bloomberg reported that Gotham claimed Carvana might have to postpone its annual report filing. Any late filing, accounting restatement, or intensified scrutiny over related-party financing could keep the stock on a rollercoaster. 6
Investors are focused on Feb. 18, when Carvana is set to release its fourth-quarter and full-year results after market close, followed by a call at 5:30 p.m. ET. Market watchers will be keen to hear how management tackles the recent allegations and if there are any hints about changes to disclosure or filing schedules. 7
