Carvana (CVNA) shares remained under pressure on Friday after Hindenburg Research revealed a short position on Thursday. This was due to concerns over the company’s gross profit per unit (GPU) and related-party loan sales. However, JPMorgan analysts, led by five-star analyst Rajat Gupta CFA, doubled down on their Overweight rating and emphasized that their own research “has not suggested any red flags,” although they acknowledge the need for more transparency from Carvana on loan sale profits and cash flow details.
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Hindenburg’s report accused Carvana of selling $800 million in auto loans to a related third party and claimed that nearly 26% of Carvana’s gross profit over the last nine months came from such deals. JPMorgan highlighted that broader concerns about auto loan defaults and delinquencies are real but not new, and these risks impact the entire industry, not just Carvana.
JPMorgan also believes that Carvana’s EBITDA per unit, rather than GPU alone, is key to understanding its financial performance. While the firm noted that the reported numbers seem unusually high, it still views the stock as a buying opportunity following the weakness from the short report. Carvana’s shares fell nearly 9% at the time of writing but remain up nearly 300% during the past 12 months after overcoming bankruptcy fears that dragged down the stock in the years prior.
Is CVNA Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CVNA stock based on seven Buys, nine Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. In addition, the average CVNA price target of $247 per share implies 35.2% upside potential.
