(Reuters) -Hindenburg Research said on Thursday it was short on Carvana Co (NYSE:) accusing the used-car retailer of insider trading and accounting manipulation.
Shares of the Tempe, Arizona-based company were down nearly 4% in afternoon trading.
“Our research uncovered $800 million in loan sales to a suspected undisclosed related party, along with details on how accounting manipulation and lax underwriting have fueled temporary reported income growth,” the short seller alleged in its report.
Carvana declined to comment on the report.
The company, which once faced bankruptcy, topped analysts’ estimates for third-quarter revenue when it last reported in October.
Carvana’s shares nearly quadrupled in 2024 after its quarterly profits gradually improved over the years aided by cost saving measures including slowing down on car purchases and pausing some hiring, as it navigated a bumpy used vehicles market.
Pre-owned car demand has also been improving over the past few months, helping retailers like Carvana.
The company went on an expansion-spree during the pandemic to capitalize on a shortage of new vehicles at that time, but struggled to sell units at enough profit.
