Hindenburg Research shorts Carvana, questions company's recovery claims

Hindenburg Research has shorted Carvana, claiming the company's recent recovery is misleading. The report highlights issues with loan sales and the relationship between CEO Ernie Garcia III and his father, Ernest Garcia II, who is the largest shareholder. Carvana's stock fell about 3% following the report, which alleges $800 million in questionable loan sales and accounting manipulation. Hindenburg suggests that Carvana is extending loans to mask rising delinquencies, with ties to DriveTime, a dealership owned by Garcia II. This scrutiny is not new for the Garcia family, who have faced lawsuits alleging self-enrichment schemes. Carvana, which went public in 2017, continues to rely on DriveTime for financing services and has various financial ties with the dealership.