Carvana Co. (NYSE:CVNA) shares fell sharply on Wednesday after prominent short seller Jim Chanos said he saw “lots of red flags” in the company’s business model and financial disclosures.
His comments, made during an investor presentation, reignited concerns about Carvana’s exposure to the subprime auto lending market and the sustainability of its recent growth.
The remarks came amid broader unease over rising delinquencies in auto loans, which could pressure used-car retailers with heavy financing operations.
The stock dropped as much as 13% intraday, marking one of its steepest declines in months, as traders took profits following a strong run-up earlier this year. Shares were trading down around 9.5% on Wednesday afternoon.
The selloff came even as analysts pointed to continued strength in the company’s fundamentals.
Jefferies believes Carvana is set to post another strong quarter, with retail unit sales likely beating Wall Street expectations.
Jefferies’ proprietary web-scrape data suggests Carvana sold about 159,000 retail units in the third quarter, representing 46% year-over-year growth and about 6% above consensus estimates. September sales grew 54% from a year earlier, the fastest pace since late 2024, positioning the company for a fifth consecutive quarter of more than 40% growth.
Jefferies also pointed to pricing strength, with average selling prices rising about 5% from a year ago to $26,300, outpacing broader industry trends. The firm expects retail vehicle revenue per unit to climb 8% year over year, supported by a mix shift toward higher-end vehicles and an accounting change related to a major commercial marketplace partner.
Monthly traffic to Carvana’s website has also accelerated, up 20% year over year in July, 18% in August, and 22% in September. “We see accelerating traffic growth paired with unit sales momentum exiting Q3 supporting upside to the consensus estimate for 32% growth in Retail Units in Q4,” the analysts noted.
Jefferies kept its above-consensus estimates unchanged ahead of Carvana’s quarterly earnings report next week, projecting full-year 2025 EBITDA of about $2.3 billion. The analysts said Carvana remains “best-positioned to benefit from a nascent shift to digital in the $800 billion used car market.”