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Hindenburg short Carvana, calls turnaround ‘a mirage’
Carvana’s (CVNA) stock spiked 284% in 2024 despite facing bankruptcy risks in 2022 and 2023, with “investors believing the company’s worst days are behind it,” Hindenburg Research stated in a newly-published short report. However, the firm’s research shows “Carvana’s turnaround is a mirage,” according to the firm, which says its 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 – all while insiders cash out billions in stock.” The short-seller adds: “Even before considering the findings of our investigation, Carvana is exorbitantly valued, trading at an 845% higher sales multiple relative to online car peers CarMax and AutoNation, and a 754% premium on a forward earnings basis. The company has ~$4.8 billion in net debt and is junk-rated by ratings agencies… Overall, we think the Garcias will leave shareholders with nothing. At any point in Carvana’s two incredible stock runs, it could have raised significant capital and de-risked its balance sheet.”
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Hindenburg Research, a renowned short-selling firm, has recently released a scathing report on Carvana, a popular online platform for buying and selling used cars. The report, titled “Carvana: Turnaround or Mirage?”, questions the company’s recent success and paints a bleak picture of its future prospects.
In the report, Hindenburg accuses Carvana of engaging in deceptive practices to inflate its stock price and mislead investors. The firm points to several red flags, including questionable accounting practices, misleading marketing tactics, and a lack of transparency in its operations.
Hindenburg also highlights Carvana’s reliance on debt to fund its rapid expansion, warning that the company may be on the brink of financial collapse. The firm predicts that Carvana’s stock price will plummet in the near future as investors realize the true extent of its problems.
Carvana has vehemently denied Hindenburg’s allegations, calling them “baseless and misleading”. The company insists that it is on track for continued growth and profitability, and that its turnaround efforts are indeed paying off.
Investors are now left to decide whether to believe Carvana’s optimistic outlook or heed the warnings of Hindenburg Research. As the debate rages on, one thing is certain: the future of Carvana remains uncertain, and only time will tell whether its turnaround is real or merely a mirage.
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Hindenburg, Carvana, turnaround, mirage, short seller, stock market, tech company, auto industry, investing, financial analysis
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