Highlights

  • Carvana shares dropped nearly 14% after a short-seller alleged USD 1B in accounting irregularities.
  • The report questioned related-party transactions involving DriveTime, Bridgecrest, and GoFi.
  • Analysts maintained ratings and raised targets following record quarterly financial results.

Carvana Co. (NYSE:CVNA) witnessed sharp volatility in late January 2026, with its share price closing at USD 427.44 on January 29, up USD 17.40 (+4.24%) on the day. Despite the daily rebound, the stock remains under pressure, down USD 50.35 (-10.54%) over the past five days and USD 2.11 (-0.49%) over the past month. The recent swings followed allegations that surfaced shortly after the company reported record quarterly financial performance, creating uncertainty for market participants.

Allegations Focus on Related-Party Dealings
The Gotham City Research report centered on Carvana’s connections with businesses controlled by the Garcia family, including DriveTime Automotive Group and Bridgecrest. According to the report, Carvana overstated earnings during the 2023–2024 period by more than USD 1B through intercompany transactions that allegedly subsidized operating performance.

A key point involved GoFi LLC, an entity that reportedly generated nearly all of its 2024 revenue—about USD 7.1M—from gains on finance receivable sales. The report suggested this structure may have facilitated capital transfers between related companies rather than functioning as an independent business. It also noted that DriveTime recorded operating cash outflows exceeding USD 900M between 2022 and 2024, challenging assumptions that it served as a financial backstop for Carvana.

Additional scrutiny was placed on loan valuation practices. Gotham alleged that Carvana booked immediate gains by selling loans to Bridgecrest at elevated values, while Bridgecrest later marked down those assets. Carvana rejected the claims, stating that all related-party transactions were accurately disclosed.

Financial Results Show Record Performance
Despite the allegations, Carvana reported its highest quarterly revenue in Q3 2025 at USD 5.65B, reflecting a 55% year-over-year increase. The company also posted GAAP operating income of USD 552M and adjusted EBITDA of USD 637M, translating to an 11.3% margin.

Balance-sheet metrics showed USD 2.1B in cash, approximately USD 1.2B in debt retired over two years, and a leverage ratio of 1.5x. Operational updates included progress in integrating the ADESA auction network, enabling faster vehicle delivery in select markets.

Analyst Targets Move Higher Amid Volatility,
Several brokerages adjusted their forecasts. JPMorgan reiterated an Overweight rating with a USD 510 target, while Wells Fargo raised its target to USD 525. The consensus 12-month price target stands near USD 474.27, based on 25 analyst ratings.