CVNA Shares In Spotlight After Gotham City Research Highlights Red Flags — What Does The Street Think?

• Gotham said that it sees concerns around accounting, disclosure, and business practices at Carvana that will lead to regulatory trouble.
• Meanwhile, JPMorgan expects Carvana to report a "solid beat and raise" in Q4. 
• The company is expected to report fourth-quarter earnings on Feb. 18.

Shares of Carvana (CVNA) plummeted 10% on Wednesday after activist short-seller Gotham City Research put out a detailed report on the company, raising concerns about its earnings being “overstated.”

Gotham City opined in its report that Carvana’s earnings are overstated by over $1 billion and is “far more dependent” on its related parties, DriveTime and Bridgecrest, than disclosed.

“We see problems with accounting, disclosure, and business practices that will lead to regulatory trouble. At best, we believe CVNA is far less profitable than believed, as a standalone business,” Gotham said in its report.

“At worst, CVNA is more like Tricolor, rather than Amazon. Either way, shares face massive downside risk to the share price,” the firm added.

Analysts Remain Bullish

Meanwhile, JPMorgan raised the price target on Carvana to $510 from $490 and kept an ‘Overweight’ rating on the shares as part of a Q4 earnings preview on Wednesday, citing strong unit growth assumptions.  

The firm expects Carvana to report a "solid beat and raise" in Q4, but reduced estimates slightly to reflect modestly lower pricing and slightly higher spending to factor in new vehicle franchise acquisitions.

Earlier this week, Wells Fargo analyst David Lantz also raised the price target on Carvana to $525 from $500 while keeping an ‘Overweight’ rating on the shares.

The used car retailer’s fourth-quarter (Q4) earnings are expected on Feb. 18.

Earnings Expectations

Carvana is a prominent online-only used car retailer headquartered in Phoenix, Arizona, known for its "no-dealership" model. Wall Street expects the company to report Q4 revenue of $5.24 billion, up from the $3.55 billion reported in the corresponding quarter of 2024, and earnings of $1.17 per share, lower than the $1.18 reported in Q4 2024, according to data from Fiscal AI.

The company had said in October that it expects retail units sold above 150,000 for Q4, provided the operating environment remains stable. This is higher than the 114,379 retail units sold by the company in the corresponding quarter of 2024 and in line with the 155,941 units sold in Q3 2025.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around Carvana fell from ‘bearish’ to ‘extremely bearish’ territory over the past 24 hours, while message volume rose from ‘high’ to 'extremely high' levels.

CVNA stock has gained 75% over the past 12 months. 

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