(Reuters) -Hindenburg Research said on Thursday there was a shortage Carvana Co (NYSE:), accusing the used car seller of insider trading and accounting manipulation.
“Our investigation uncovered $800 million in loans to a suspected undisclosed related party, along with details of how accounting manipulation and lax underwriting fueled temporary reported income growth,” the short seller claimed 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 inaccurate and have been made numerous times by other short sellers seeking to profit from a decline in our stock price,” a Carvana spokesperson said.
The company, once in bankruptcy, beat analysts’ expectations for third-quarter revenue when it last reported in October.
Shares of Carvana are set to nearly quadruple in 2024 after improving quarterly profits over the years, helped by cost-cutting measures including slowing car purchases and ceasing some rental operations as the company navigates a bumpy used-vehicle market .
Demand for used cars has also improved in recent months, benefiting retailers like Carvana.
The company expanded significantly during the pandemic to take advantage of the then shortage of new vehicles, but struggled to sell units at a sufficient profit.
