On Wednesday, Gotham City Research published a detailed report accusing Carvana of overstating its net income by approximately $1 billion over the 2023–2024 period. The short seller claims the company’s largest shareholder funneled business to affiliated entities—used-car dealer DriveTime and loan servicer Bridgecrest—to manufacture sales and inflate margins. Carvana reported combined net income of roughly $550 million for those two years, a figure that Gotham City contends understates the true magnitude of the alleged manipulations. These accusations echo similar claims made by Hindenburg Research in early 2025 and by veteran short seller Jim Chanos later that year.

Following the report’s release, Carvana shares plunged nearly 20% in a single session, erasing year-to-date gains and marking the steepest one-day decline since the company’s shares nearly collapsed in late 2022. Over the past three years, the stock has surged by more than 10,000% after hitting an all-time low in December 2022. That rally was driven by aggressive cost-cutting measures and a debt-restructuring agreement finalized last year, which shortened the company’s path to positive free cash flow and paved the way for its inclusion in the S&P 500 in December 2025.

Investors face renewed uncertainty regarding Carvana’s financial transparency and governance practices. If Gotham City’s allegations lead to formal investigations or restatements, the company could incur significant legal fees and regulatory penalties. Management has not yet provided a detailed rebuttal, and Carvana did not respond to requests for comment prior to publication. Market participants will be closely watching the upcoming quarterly earnings release and any disclosures in the next proxy statement for signs of how the board and auditors intend to address these challenges.