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Gotham City Research | Carvana Short Thesis
Gotham City Research
January 2026
70 Pages
FOIA Documents
Short Thesis
Carvana $CVNA: Bridgecrest and the Undisclosed Transactions
DriveTime burned $1B+ in cash while Carvana turned profitable — we believe this is no coincidence.
Share Price
$477.72
Market Cap
$100.3B
DT Cash Burn
-$1B+
DT Leverage
20-40x
Loan Markdown
-$900M
Garcia Extracted
$352M
Price Target
$100-186
Core Thesis
Key Allegations
Carvana is a highly levered ecosystem masquerading as a turnaround story, with earnings dependent on undisclosed related-party subsidies from DriveTime.
Via FOIA, we obtained DriveTime's 2024 Annual Report revealing $1B+ cash burn, 20-40x leverage, and $900M loan markdowns — all while CVNA booked record profits. We believe DriveTime's pain is Carvana's gain.
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DriveTime Cash Burn
DT burned $1B+ in cash 2023-2024, exactly when CVNA turned cash-flow positive for the first time.
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Historic Leverage
DT leverage surged to 20-40x vs historical cap of 10.3x. EBITDA doesn't cover interest expense.
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$900M Loan Markdown
Bridgecrest instantly marked $5.9B loan book down 15% while CVNA booked $755M gain on sales.
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Garcia Extraction
Garcia II extracted $352M from DriveTime while it burned cash — funded by debt issuance, not contributions.
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Disclosure Failures
CVNA 10-K and DriveTime AR contain accounting irregularities and conflicting related-party figures.
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Circular Transactions
GoFi/Bridgecrest originate loans for CVNA-sold cars, undisclosed in filings. Evidence of loan dumping.
Gotham City Research Conclusion
Shares Uninvestable — 61-79% Downside
▼ Short Position
CVNA's earnings are overstated by $1B+, dependent on undisclosed related-party subsidies backed by 20-40x leverage at DriveTime. Without transparency, this fragile construct is an accident waiting to happen.
⚠️
Auditor Resignation
Grant Thornton likely to resign; 10-K delays expected
📜
SEC Subpoena
CVNA received SEC subpoena June 2025
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Credit Collapse
DT creditors may cease funding once leverage exposed
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Restatement Risk
Accounting irregularities require 10-K restatements