Shares of Carvana fell more than 20% during trading on Wednesday, January 28, after a Gotham City Research report alleged that the company’s reported profitability relies on undisclosed related-party transactions with DriveTime and Bridgecrest. The report claims DriveTime burned over $1 billion in cash while levering up to 20x to 40x EBITDA to subsidize Carvana’s earnings, and that Bridgecrest marked down billions in loans as Carvana recognized gains on loan sales. Block & Leviton is investigating.
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