BITG says allegations in Carvana short report ‘not well-founded’

BTIG keeps a Buy rating on Carvana (CVNA) with a $535 price target following yesterday’s short report. The accusations were primarily tied to Carvana’s relationship with DriveTime, an entity owned by Ernie Garcia II, who is the controlling shareholder of Carvanaand the father of the company’s co-founder and CEO, Ernie Garcia III, the analyst tells investors in a research note. That DriveTime and Carvana are related parties is not news to the market, but the market seems to be giving the latest round of allegations credence as DriveTIme’s annual report has been obtained for the first time through a Freedom of Information Act request, the analyst tells investors in a research note. BTIG believes the most serious allegations against Carvana “are not well-founded.” The firm disagrees with the DriveTime leverage calculation, the servicing fee calculation, and with the write-down logic in the short report.