Summary
Carvana (NYSE:CVNA) rebounded Thursday, rising 6% after a sharp 14% decline the day before that was sparked by a short report from Gotham City Research. Multiple sell-side analysts issued rebuttals to the report’s central claims, contending that the analysis misrepresented key financial metrics and overstated gaps in service income.
Analysts contest the short report
JPMorgan analyst Rajat Gupta directly challenged several of the short report’s conclusions. Gupta said the report contained "an incorrect representation of service income" that resulted in overstating certain discrepancies by "~20x." He added that the report conflated cumulative metrics with annual metrics, producing what he described as a "significant misrepresentation of facts."
Gupta also expressed surprise at the magnitude of the stock’s reaction to the report, writing, "We were surprised by the magnitude of CVNA’s share price reaction yesterday, particularly in context of the fairly straightforward math around typical ABS deal economic." He maintained an Overweight rating on Carvana.
Additional defenses from the sell side
William Blair analyst Sharon Zackfia underscored Carvana’s consumer traction, describing the company as already "the second-largest seller of used cars in the U.S." Zackfia projected that Carvana remains on course to achieve its stated objective of selling 3 million used cars toward the nearer end of its previously communicated 4-to-9-year target window, a path that she said implies potential unit sales growth of up to 40%.
BTIG analyst Marvin Fong, who retained a Buy rating and a $535 price target on the stock, also disputed multiple elements of the short report. Fong wrote, "We disagree with the DriveTime leverage calculation... the servicing fee calculation... the write-down logic... [and] with using CFO as a P&L measure."
Short report focus and market reaction
The short report concentrated on Carvana’s ties to DriveTime, a company owned by the father of Carvana’s CEO. That focus preceded the prior day’s decline and the subsequent defensive responses from the analysts noted above.
Conclusion
The market reaction included a notable intraday rebound as multiple analysts publicly disputed the short report’s findings and reiterated favorable views on Carvana’s operations and outlook. The episode highlights how analyst commentary can influence investor perception following critical third-party reports.