CVNA Stock Today: January 29 -14% on Gotham $1B Earnings Claim
Carvana stock slid about 14% on Jan. 29 after short seller Gotham City Research said the company overstated 2023–2024 earnings by over $1 billion and relied on financing linked to Garcia-controlled firms. Shares of CVNA swung sharply as Carvana called the report inaccurate and said its disclosures are proper. The company reaffirmed its Feb. 18 earnings date. We break down the claims, the company’s response, today’s trading setup, and what investors should track into the 10-K and results.
What Gotham Alleges vs. Carvana’s Response
Gotham City Research said Carvana overstated 2023–2024 earnings by more than $1 billion, pointing to accounting around finance receivables and securitizations. The report argues headline profitability paints a rosier picture than economic earnings. Carvana shares fell after the claims surfaced, and the report has sparked debate about quality of earnings and disclosure depth. See coverage on CNBC.
The report also highlights related-party financing and transactions tied to Garcia-controlled businesses. It questions the independence, pricing, and durability of those arrangements if credit conditions tighten. The concern is that funding costs or availability could shift, which would pressure margins and cash flow. These are material topics for an asset-heavy, rate-sensitive used-car retailer.
Carvana said the report is inaccurate, its disclosures are proper, and it plans to release results on Feb. 18 as scheduled. Management emphasized that its filings include appropriate related-party details. The market will look for auditor sign-off and added clarity in the 10-K. See additional reporting in the Financial Times.
Today’s Move: Price, Volume, and Technicals
Shares dropped to $422.99, down about 14% from the prior close of $477.72. The session opened at $431.27, traded between $420.50 and $445.00, and saw volume near 3,371,194 versus a 4,050,222 average. The stock remains well above its 200-day average of $350.26 and near its 50-day average of $418.41, pointing to elevated but intact trend support.
RSI sits at 62.07, showing positive momentum, while the MACD histogram at -1.69 signals fading strength. ADX at 25.49 indicates a firm trend. ATR at 19.66 points to wide daily swings. Bollinger bands center on 442.86 with a lower band near 410.88, a zone traders often watch for potential support if pressure persists.
The stock is down 14.17% over 1 day and 14.18% over 5 days. It is off 6.49% in 1 month, yet up 13.21% in 3 months and 67.46% over 1 year. Year to date it is higher by 2.44%. The 52-week range spans $148.25 to $486.89, underscoring how sensitive Carvana stock remains to sentiment and news flow.
What to Watch Ahead of Feb. 18
Investors will focus on auditor sign-off, the 10-K timeline, and added detail on securitizations, credit performance, and related parties. If management addresses the key points raised, it could reduce uncertainty. If filings slip or new questions arise, volatility may increase, and the discount rate the market applies to earnings could widen.
Balance sheet markers merit attention. Debt-to-equity is 2.52, interest coverage is 3.11, and the current ratio is 4.05. Cash is about $19.45 per share, and working capital is $4.72 billion. Any change in related-party financing terms or costs would flow through margins, free cash flow, and securitization economics.
Valuation is rich with a P/E near 93 and price-to-sales around 4.86. Analyst tally shows 31 Buys and 1 Sell, while one composite rating flags a C+ with a Sell tilt. That split sets the stage for sharp moves on guidance, credit metrics, and unit economics when results arrive on Feb. 18.
Final Thoughts
Carvana stock fell hard after fresh short seller claims, and the next catalyst is the Feb. 18 report and 10-K. We think three things matter most. First, clear auditor sign-off and disclosure on securitizations and related-party dealings. Second, evidence that margins and cash flow can hold if funding costs shift. Third, guidance that supports current multiples. Active traders can lean on levels around the 50-day average near $418 and the lower Bollinger band near $411 to frame risk. Long-term investors should plan for swings, focus on balance sheet strength, and reassess position sizing into earnings. Stay disciplined, verify data, and avoid reacting to headlines without context.
FAQs
Why did Carvana stock drop about 14% today?
Shares fell after Gotham City Research alleged the company overstated 2023–2024 earnings by over $1 billion and raised concerns about related-party financing tied to Garcia-controlled firms. Carvana disputed the claims and reaffirmed its Feb. 18 earnings date. The headline risk sparked heavy selling and wider intraday ranges.
What exactly did Gotham City Research allege?
The report claims Carvana’s reported profitability over 2023–2024 overstates true economic earnings by more than $1 billion. It also questions financing and transactions linked to Garcia-controlled entities, suggesting possible risks to funding costs, availability, and disclosure quality. These points aim at the quality and sustainability of reported results.
How did Carvana respond, and when are earnings due?
Carvana called the report inaccurate, said its disclosures are proper, and kept its earnings schedule for Feb. 18. Management will likely address questions on securitizations, credit performance, and related-party dealings. Auditor sign-off and the 10-K will be key for confidence and could affect post-earnings volatility.
Is CVNA stock expensive after the selloff?
Even after the drop, valuation is elevated with a P/E near 93 and price-to-sales around 4.86. Sentiment is split: many analysts rate it Buy, while one composite rating shows C+ with a Sell view. Upside likely requires clean disclosures, steady credit metrics, and supportive guidance.
What levels and indicators are traders watching now?
Traders are watching the 50-day average near $418 and the lower Bollinger band around $411 as potential support zones. RSI at 62 suggests momentum remains positive, while a negative MACD histogram shows fading strength. ATR near 19.7 implies wide daily swings, so position sizing is important.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
