Shares of online used-car retailer Carvana (CVNA) are rallying today after Wall Street analysts came to the company’s defense following a short report from Gotham City Research. Notably, that report had knocked the stock down by about 14% the day before, as it raised questions about Carvana’s financial practices. However, five-star JPMorgan (JPM) analyst Rajat Gupta, who has a Buy rating and a $510 price target on Carvana, said that the short report misunderstood key financial numbers.
Claim 50% Off TipRanks Premium
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
According to Gupta, the report mixed long-term, cumulative figures with annual results, which led to incorrect conclusions. In addition, he said he was surprised by how sharp the stock’s drop was, especially given what he described as fairly straightforward math related to asset-backed securities and well-known challenges from 2022 and 2023 loans. He also said the report wrongly described how service income from DriveTime flows through Carvana’s loan-related businesses.
Unsurprisingly, Carvana strongly rejected the accusations as well. In a statement on Wednesday, a company spokesperson said that the report was inaccurate and intentionally misleading. The company stated that all related-party transactions are fully disclosed in its financial statements. Carvana also reminded investors that it plans to release its 2025 earnings on February 18, 2026, which suggests that upcoming results should help address investor concerns.
Is CVNA Stock a Good Buy?
Overall, analysts have a Strong Buy consensus rating on CVNA stock based on 16 Buys, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average CVNA price target of $790.88 per share implies 87.6% upside potential.
