Carvana Stock Falls on Short-Seller Report Alleging Overstated Earnings -- WSJ

Dow Jones01-29

By Christopher Otts

Shares in high-flying used-car retailer Carvana were down as much as 22% on Wednesday after the release of a short seller's report that alleges the company's earnings are "far more dependent" than previously known on private companies linked to Carvana's controlling shareholders.

Carvana, a nationwide seller of used cars known for its online process, has had a dramatic turnaround from bankruptcy rumors in late 2022 to a market cap of about $104 billion before today's stock plunge. It entered the S&P 500 on Dec. 22.

Short seller Gotham City Research alleged the company's earnings are overstated by $1 billion from 2023 to 2024. Gotham published the 2024 audited financials of DriveTime Automotive Group, Inc. and Bridgecrest Acceptance Corp., which are owned by Ernest Garcia II, the father of Carvana Chief Executive Ernest Garcia III.

Carvana was spun out of DriveTime in 2014, and Bridgecrest administers auto loans originated by Carvana. The Garcias control Carvana with 84% of the company's voting stock.

The company didn't immediately respond to a request for comment. A year ago, the now-shuttered short seller Hindenburg Research also alleged accounting irregularities with Carvana, but the market shrugged off those allegations.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

January 28, 2026 15:38 ET (20:38 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.

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It entered the S&P 500 on Dec. 22. \n\n\n     Short seller Gotham City Research alleged the company's earnings are overstated by $1 billion from 2023 to 2024. Gotham published the 2024 audited financials of DriveTime Automotive Group, Inc. and Bridgecrest Acceptance Corp., which are owned by Ernest Garcia II, the father of Carvana Chief Executive Ernest Garcia III. \n\n\n     Carvana was spun out of DriveTime in 2014, and Bridgecrest administers auto loans originated by Carvana. The Garcias control Carvana with 84% of the company's voting stock. \n\n\n     The company didn't immediately respond to a request for comment. A year ago, the now-shuttered short seller Hindenburg Research also alleged accounting irregularities with Carvana, but the market shrugged off those allegations. \n\n\n       This item is part of a Wall Street Journal live coverage event. 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