- Hindenburg Research accuses Carvana of hiding $800 million in loans linked to a related party.
- Investigators allege it inflated its income using lax underwriting and questionable accounting.
- Carvana’s stock surged 284% in 2024, reversing its near-bankruptcy status two years ago.
Just two years ago, Carvana was teetering on the edge of bankruptcy, its survival hanging by a thread. Now, as 2025 kicks off, the company’s stock price has skyrocketed by an astonishing 284% over the course of 2024. So, what changed? According to Carvana, the turnaround is the result of innovation, rising sales, and an expanded market presence.
Hindenburg Research, however, paints a far less flattering picture. The notorious short seller—known for exposing Nikola as a “fraud” and accusing Lordstown Motors of misleading investors by exaggerating demand for its pickup and production capabilities—claims Carvana’s resurgence is nothing more than an elaborate mirage. Hindenburg alleges financial misconduct is behind the company’s apparent comeback, calling into question whether Carvana’s success is truly built to last.
A Troubled Past, Now Back in the Spotlight
Carvana isn’t exactly known for its sterling reputation in the in the automotive world or the business world in general. Due to misconduct of one type or another, it lost licenses to sell cars in Michigan, Pennsylvania, and Illinois several times. It sold stolen cars to customers only for those same folks to lose their ride once the authorities figured out what happened.
More: Carvana Now Applies $4,000 Used EV Tax Credit Instantly At Checkout
Despite that messy history, things looked up after a very successful-looking year in 2024. Hindenburg Research says that in reality, it’s a “Father-Son Accounting Grift For The Ages.” That’s the hard-hitting title of a new report on the brand. Their investigation alleges that the company has $800 million tied up in questionable loan sales to what may be an undisclosed related party. And that’s just the tip of the iceberg.
Creative Accounting or Something Worse?
According to Hindenburg, Carvana isn’t merely benefiting from a booming used car market; it’s allegedly gaming the system through accounting tricks and relaxed lending practices. Hindenburg believes that many of the loans from Carvana to buyers that would typically be delinquent are getting extensions from the company in order to keep the percentage of delinquencies low.
The allegations don’t stop there. Hindenburg highlights the close relationship between Carvana and DriveTime, a loan servicing company owned by Ernie Garcia II, father of Carvana’s CEO, Ernie Garcia III. That’s important because DriveTime is the loan servicer for Carvana. The two companies share revenue generated through those loans and sometimes they sell cars to one another. As a result of its research, Hindenburg has opened a short position on Carvana.
It’s worth noting that these claims aren’t coming from some random firm. Hindenburg Research has a history of successful shorts. The company touts its research prowess and findings as the reason it manages such a high rate of correct calls. Multiple studies suggest that it is correct 75 percent of the time or more. Whether this call on Carvana proves true is something we won’t know for some time though.