Kerrisdale Capital published a follow-up report on Carvana (NYSE: CVNA — $16.8 billion), an online platform for buying and selling used cars. Kerrisdale raised concerns about the company’s valuation and challenging growth prospects and said the company is “a poorly capitalized, growth-challenged auto retailer now valued at an absurd 42x EV/2024E EBITDA.” Kerrisdale also published a letter to Carvana’s auditor, Grant Thornton, raising concerns about its auto financing agreements with DriveTime Automotive. Kerrisdale wrote, in part,“Carvana’s relationship with DriveTime is far from arm’s length, in our opinion. DriveTime is controlled by Ernie Garcia II, a controlling shareholder of Carvana and father of Carvana’s CEO Ernie Garcia III, making them literally related parties.”
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