Used-car retailer Carvana (CVNA) was hit with a short report from Hindenburg Research today. According to the firm, the recovery CVNA stock underwent in 2024 is a “mirage.” Chief among its concerns are $800 million in loan sales to an undisclosed third party. The firm points toward accounting manipulation and lax underwriting as possible concerns.
Don't Miss Our New Year's Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Another issue Hindenburg Research has with Carvana is its immense overvaluation. The firm notes CVNA is trading at an “845% higher sales multiple relative to online car peers.” It also highlights the company’s “754% forward earnings premium,” as a red flag in its short report.
Another detail from the short report worth remembering is the falling price of used cars. Hindenburg Research notes prices have dropped 20.3% in the past three years, which is a major headwind for the used-car retailer
How This Affects CVNA Stock Today
CVNA stock initially dropped when Hindenburg Research released its short report this morning. However, the stock has recovered and is up 3.02% as of this writing. That comes with heavy trading as more than 5 million units have changed hands. For comparison, the stock’s three-month daily average trading volume is 2.77 million shares.
Hindenburg Research’s short report against Carvana makes sense with its recent stock movement. The company’s shares are up 349.59% over the last 52 weeks. That’s an incredible rise considering the used-car retailer flirted with bankruptcy in 2022 and 2023.
Is CVNA Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Carvana is Moderate Buy based on seven Buy and nine Hold ratings over the last three months. With that comes an average price target of $247, a high of $330, and a low of $175. This represents a potential 17.85% upside for CVNA shares.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
