JPMorgan Sticks With Outperform Call on Carvana Despite Short-Seller Report

Carvana (CVNA) shares continued their slide Friday after short-selling firm Hindenburg Research declared a short position in the company, but JPMorgan analysts stuck with their “overweight” call on the used-car retailer.

JPMorgan wrote Friday that its own research on Carvana “has not suggested any red flags” regarding the company.

The Hindenburg report sounded alarm bells about the company’s gross profit per unit and practice of selling consumer auto loans to third parties. Specifically, the hedge fund claimed to have uncovered $800 million in loan sales to an unidentified “related third party” and said that nearly 26% of the company’s gross profit over the past nine months was due to such loan sales.

JPMorgan Doesn’t See Carvana Reporting as ‘Inflated’

JPMorgan said in a note that there is “room for CVNA to provide more disclosure,” but said the issues around auto-industry loan defaults aren’t new and that demand for used cars remains strong.

“We do not see CVNA’s reported economics as inflated,” the analysts added. 

Shares of Carvana almost 5% intraday Friday after losing about 2% Thursday. The company’s shares have, however, nearly quadrupled in value in 2024—a huge turnaround after bankruptcy concerns hurt the company’s share price in previous years.