Carvana may be a house of cards.
This may be in part because Carvanas underwriting practices on those loans have been historically suspect.
What exactly is happening in Carvanas underwriting process?
A Carvana vending machine© Angus Mordant/Bloomberg via Getty Images
Basically, a rubber stamp, according to the report.
Even the companys so-called prime borrowers have a 60-day delinquency rate four times higher than the industry average.
All that to say, Carvana car loans are a major risk.
Yet the company has found a new buyer for them even as Ally and others turn away.
The thing is, though, Hindenburg doesnt think this buyer is unrelated.
This juiced sales and investors rallied behind the company, pushing its stock price to new highs.
Overall, we think the Garcias will leave shareholders with nothing, Hindenburgs report concludes.
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