(Reuters) – Hindenburg Research said on Thursday it was short Carvan Co (NYSE: ), accusing the used car dealer of insider trading and accounting manipulation.
“Our investigation uncovered $800 million in loan sales to a suspected undisclosed related party, along with details of how accounting manipulations and poor underwriting fueled the temporary reported revenue growth,” the short seller said in its report.
Shares of the Tempe, Arizona-based company closed down nearly 1.9% on Thursday and were down 3.8% before the bell on Friday.
“The arguments in (Thursday’s) report are deliberately misleading and incorrect and have been made many times before by other short sellers who want to profit from a decline in our stock price,” a Carvana spokesman said.
The company, which once faced bankruptcy, beat analysts’ estimates for third-quarter revenue when it last reported in October.
Carvana shares nearly quadrupled in 2024 after its quarterly profit improved over the years helped by austerity measures, including slowing car purchases and pausing some hiring, as it navigated a bumpy used-car market.
Demand for used cars has also improved in recent months, helping dealers like Carvana.
The company expanded during the pandemic to take advantage of the lack of new vehicles at the time, but struggled to sell units at a sufficient profit.
