Carvana: A Father-Son Accounting Grift for the Ages – Hindenburg Research
hindenburgresearch.com
hindenburgresearch.com
I did and was quickly given a firm offer from their algorithm which was several thousand dollars higher than the highest amount I'd thought possible. It was actually substantially more than my Mom had paid for the car used four years earlier. I was wary as this seemed too good to be true but proceeded through the automated process, which was simple and straightforward. This culminated with an appointment the following day where a Carvana rep came to our house and looked over the car. I expected at this point they'd suddenly "find things wrong" and low ball the estimated price - however, the car really was in exactly the condition I described (which was excellent) - and the rep gave us a check for the offered amount and left with the car.
It was fast, easy and substantially more than the 'market price' range for the car. I just shrugged and chalked it up to Carvana blowing investor money to acquire inventory during the weird post-Covid period when there weren't many decent low-miles used cars on the market. While Carvana might have managed to sell it for what they paid my mom, it wouldn't have been quick to find a buyer at that price and there was certainly no room for them to make a profit. So... I'm not surprised to hear claims that Carvana isn't financially sound. If true, it's unfortunate because buying or selling a used car is inefficient and needlessly painful. I'm pretty sure a well-run company could sustain a viable business in brokering used cars. The typical new car dealer trade-in offers are awful and used car lots are notorious for low-ball offers, so it shouldn't be that hard to do better enough to be attractive.
The price was reasonable for what I bought, they delivered the car directly to my place and handled all of the registration in CA (came with dealer plates, and the CA DMV paperwork and plates arrived in the mail within weeks).
It may be a terrible place to invest (I have no actual opinion on this, I'm just commenting based on the contents of the linked report) but I have no complaints about them as a customer.
On the other hand, their reasoning for the accompany being risky and overpriced sounds pretty strong, if perhaps in way too many un-grouped bullet points.
To be fair, for a company like Adani, which is very connected to India's politicians, even if they do something illegal, they'll get away with it. Corruption is very high in India and the elites and politicians just do what they want.
Even the most glowing research piece put out by a big sell-side firm I can guarantee you the sales traders will swear about internally because they feel it should have been more bullish. Even when big wall street firms don’t have a position and aren’t trying to butter up the c-suite in the hope of getting future IB fees, they are structurally long the market because of how commissions work so they want shares in general to go up.
In that context I think short research is healthy. With Hindenburg yes you know he has a (short) position so has an axe to grind, but at least you know exactly what his position is and can interpret the research through that lens. All other research should be read with the same skepticism but you should additionally make sure to identify the author’s bias because they surely have one.
I personally don’t trust any published research and would urge anyone who invests to do their own research. Also absolutely don’t trust any recommendations or “research” you read put out by someone online and least of all random investing “tips” put out by influencers/random people you meet etc. There is a huge amount of astroturfing via forums and the like and if you can’t trust the big wall street firms and specialised research boutiques you certainly can’t trust 2thaM00n1234 on reddit, or that guy you met at the golf club Christmas party, or Jane’s brother’s boyfriend’s cousin who made a bunch of money through crypto or whatever all of which could literally be anyone at all even if you think you know them.
Do the legwork yourself, make money slow. That way there’s no-one to pull the rug out from under you.
In my opinion, it's good for the market that something like Hinderburg exists. It keeps companies more honest. And if they're wrong, they'll lose money.
Yes, shorts have some negative incentives that we need to be careful about.
But they’re the only ones in the entire market who don’t have incentives to lie about how well a company is doing. A decently run market with a reasonable number of shorts would not build up to the bubbles we see regularly that collapse and need to be bailed out.
It was the shorts who noticed the housing bubble in the first place. If there’s were more of them they could have popped it much more gradually and less painfully than the crash we had which has been the precursor to a lot of the terrible things we’ve faced since then.
It's like when Google sued Oracle.
Has anyone ever been contacted by these companies when they're doing their "research"? They're usually upfront negative about the company, "We believe this company to be a fraud. Con. Disrespectful and evil place.", then they spam every available ex-employee they can scrap from LinkedIn and then the subset that respond are the disgruntled burn the company to the ground kind.
I've seen even employees make factually incorrect statements about their employer because they didn't understand or they wanted to rumour spread.
IANAL, but this is not a new tactic, and plenty of companies who are shorted would have challenged it if it were.
I mean, saying positive things about a company that you've bought shares in is essentially the same thing, and that happens all the time.