Carvana has revived a deal to sell $4 billion in used-car loan receivables to Ally Financial.
The yearlong arrangement, announced Monday (Jan. 6), comes days after a report by short seller Hindenburg Research claiming that Ally was stepping back from its partnership with the online vehicle marketplace.
A report by Bloomberg News noted that this deal upholds a key relationship for Carvana, which sells used cars, originating loans to its buyers before selling the receivables to other lenders. The report, citing data from BNP Paribas, said that Ally has typically purchased enough receivables to fund half of Carvana’s new originations.
Hindenburg said last week that it had taken a short position in shares of Carvana, alleging a “father-son accounting grift” at the company.
In its report, Hindenburg said that Carvana’s recovery is a “mirage,” that the firm engaged in “sham” deals with a private car dealership run by the father of Carvana’s chief executive, and that the company faces other challenges as well.
“Our research uncovered $800 million in loan sales to a suspected undisclosed related party, along with details on how accounting manipulation and lax underwriting have fueled temporary reported income growth — all while insiders cash out billions in stock,” Hindenburg said.
A Carvana spokesperson told PYMNTS in an emailed statement that Hindenburg’s report is “intentionally misleading and inaccurate.”
“In the 7 years since our IPO, Carvana has been one of the most heavily researched public companies,” the statement said. “The arguments in today’s report are intentionally misleading and inaccurate and have already been made numerous times by other short sellers seeking to benefit from a decline in our stock price. We plan to stay focused on executing our plan for another great year in 2025.”
Carvana reported Oct. 30 that its online car marketplace saw a 34% year-over-year increase in retail units sold during the third quarter, with total revenue up 32%.
“The machine we have built is fundamentally differentiated and the result is an opportunity with few precedents,” the company said in a letter to shareholders.
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