Roller Coaster, Meet Gravity

Inside the Seven-Year Battle to Short Carvana

When Gotham City Research published its 70-page report on Carvana on January 28, 2026, the online used car retailer had just reached an all-time high of $478.45 six days earlier. Within 15 trading days, the stock had fallen 26.5% to $350.94, marking the first time a short-seller report has produced a sustained, material decline in Carvana's share price.[1]

This article is a follow-up to our earlier coverage of Carvana and the questions surrounding its relationship with DriveTime Automotive Group, a private company controlled by Carvana's founder, Ernest Garcia II. Since that initial report, four investigative firms have published critical research on the company. The data tells a story the market largely ignored – until it couldn't.

Previous Coverage

Carvana: When Activist Short Sellers Are Right but Early — The Subprime Loan Ticking Time Bomb

Read the original Activ8 Insights analysis that preceded the Gotham City report →

CVNA Stock Price & Investigative Report Timeline

The chart below maps Carvana's full stock price history against the publication dates of each investigative report. What stands out is not only the Gotham City impact, but the pattern that preceded it: four consecutive reports, spanning seven years, that failed to produce lasting negative price action.

Market Impact: Report by Report

We measured the stock price impact of each investigative report using consistent methodology: the closing price the trading day before publication, compared against the close on the report date, the next trading day, and at the 5-day and 15-day marks following publication.

What Changed: The FOIA Strategy

The critical difference between Gotham City's report and its predecessors is source material. Prior short reports relied primarily on public filings, industry data, and inference. Gotham City Research obtained DriveTime Automotive Group's 2024 Annual Report and the GoFi LLC 2024 Annual Report through a Freedom of Information Act (FOIA) request. These are documents that had never been publicly available.[2]

DriveTime is a private company controlled by Ernest Garcia II, the father of Carvana CEO Ernest Garcia III, and the largest shareholder in both entities. Because DriveTime is not publicly traded, its financial statements are not filed with the SEC and are not ordinarily accessible to investors or analysts. The FOIA request that surfaced these documents provided the first independent look at the financial condition of the related-party ecosystem that underpins a substantial portion of Carvana's reported earnings.[2]

The Investigative Trail: 2019–2026

Gotham's report did not emerge in a vacuum. It builds on a body of work stretching back seven years. Each prior investigation raised overlapping concerns; the market dismissed each in turn.

Why This Time Was Different

Media & Market Response

The Gotham City report landed differently in newsrooms than its predecessors. Within hours of publication, the Wall Street Journal reported the stock decline and outlined the allegations of overstated earnings through related-party transactions.[8] Investor's Business Daily followed with its own coverage detailing the stock's intraday slide and Gotham's criticism of Carvana's ties to affiliated lenders.[9]

The next day brought the familiar Wall Street defense. Bloomberg reported that several analysts rallied behind the company, and the stock managed a partial bounce from $410 to $427.[10] But the recovery was tepid by Carvana standards, and it didn't hold. In the days and weeks that followed, selling resumed. The pattern that had defined every prior short report (sharp decline, analyst defense, full recovery, then new highs) broke down after the second step.

By early February, the tone of independent coverage had shifted. Seeking Alpha published an extended analysis exploring the subprime auto loan exposure underlying Carvana's financial model, framing the Gotham findings within a broader credit-quality argument.[11] The piece reflected a growing willingness among financial commentators to take the related-party concerns seriously, something that had been conspicuously absent during prior short campaigns.

February 18: Earnings Day Meets the Follow-Up

Three weeks after the initial Gotham report, February 18 delivered two significant developments for Carvana within hours of each other: the strongest financial results in the company's history and the most granular follow-up yet from the short seller that first drew blood. We won't walk through the full earnings report here — the headline numbers speak for themselves. What matters for this analysis is the tension between those numbers and the investigative claims they exist alongside.

By any conventional measure, the results were extraordinary. Carvana crossed $20 billion in annual revenue, posted record EBITDA, joined the S&P 500, and announced $12 billion in new arms-length loan purchase commitments — a data point that directly counters the narrative of dependence on related-party financing. CEO Ernie Garcia III opened the call by describing 2025 as "another incredible year" and closed by calling it "a tremendous, tremendous year."[12][14]

But what matters for this story isn't the earnings themselves. It's what happened around them. No analyst on the Q4 call mentioned Gotham City Research by name, despite the report being 21 days old and a follow-up having been published that same morning. The closest anyone came was Needham analyst Chris Pierce, who raised the subject of title and registration issues, noting they had come up "this morning" — an oblique reference at best. Garcia responded that approximately 99% of title packets are now completed by deadline, calling it "very likely best-in-class." The short-seller's specific financial claims about Bridgecrest, DriveTime, and the related-party ecosystem went entirely unaddressed.[12]

The Related-Party Revenue Line

Buried in the earnings release, however, was a data point that connects directly to the Gotham thesis. Carvana's consolidated income statement for full year 2025 reports $347 million in related-party revenue within the "Other sales and revenues" line, up from $200 million in 2024 — a 74% increase. Additionally, the "Wholesale sales and revenues" line includes $39 million from related parties, and the company paid $14 million to related parties in cost of sales and $32 million in SG&A. These are the disclosed figures.[14]

Gotham's central claim is that the disclosed numbers represent only a fraction of the actual economic relationship. If the short seller's estimates are correct — that the true related-party benefit is 2.2x to 3.5x the disclosed amount — the $347 million figure in "Other sales and revenues" would imply a total financial dependence on the DriveTime ecosystem of $763 million to $1.2 billion. Against $2.237 billion of Adjusted EBITDA, that would mean 34% to 54% of earnings power flows through entities controlled by the Garcia family. Carvana's filings describe these as arms-length transactions; Gotham disputes that characterization.[2][14]

The Gotham Follow-Up: Bridgecrest as Lienholder

Hours before the earnings call, Gotham City Research published a 40-page follow-up titled "Carvana: New Information Reveals that BridgeCrest is the lienholder." The report escalated the original thesis with three new categories of evidence.[13]

First, Gotham presented what it described as on-the-record evidence of Carvana itself identifying Bridgecrest, not Carvana, as the lienholder on vehicles that Carvana sold. Second, the firm identified 34 additional VINs where detailed vehicle history records showed Bridgecrest as the ultimate lienholder on Carvana-originated transactions, expanding the sample from the original January report. Third, Gotham revisited the first batch of 34 VINs from its initial report, presenting detailed lienholder history records that it said confirmed Bridgecrest, rather than Carvana, held the lien position throughout.[13]

The follow-up also dedicated a section to title and registration compliance, citing the January 2025 Connecticut settlement (which included a $1 million restitution fund and mandated close monitoring by the Attorney General's office), prior license suspensions in Michigan, Illinois, and North Carolina, and administrative complaints from Florida. Gotham characterized these incidents as structural to the business model rather than isolated operational failures, arguing that Carvana "flouts title and registration laws to sell cars at a faster rate than it would" if it fully complied.[13]

The timing was deliberate. By publishing its most granular evidence on the same morning that Carvana reported its strongest-ever quarter, Gotham forced a juxtaposition: record financial performance on one hand, detailed allegations of undisclosed financial arrangements on the other. The market, for the moment, has not resolved the tension. As of this writing, the stock remains more than 26% below its January peak.

Putting It in Context: $3.72 to $478.45

To understand the stakes, consider the magnitude of Carvana's price journey. On December 27, 2022, the stock traded at $3.72. Thirty-seven months later, on January 22, 2026, it reached $478.45, a gain of approximately 12,760%. That rally, one of the most dramatic in recent market history, occurred while every investigative report published during the period was met with higher prices.

The current price of $350.94 as of February 17, 2026, represents a 26.6% decline from the all-time high. It also represents a 9,334% gain from the December 2022 low. Both figures are relevant: the first captures the Gotham City impact, the second reminds observers that the company's stock remains many multiples above its near-bankruptcy level.

What We're Watching

The collision of record earnings and escalating short-seller allegations has created a rare situation in public markets: a company delivering the best financial results in its history while facing the most detailed investigative challenge it has ever encountered. Several threads will determine what comes next.