About two years ago my very elderly mother broke her hip in a minor fall and after recovering, is no longer able to drive herself comfortably and safely. So, it was time to sell her car, a low miles Kia sedan she'd bought used about four years earlier. She only drove it about once a week and only around town, so the car still had low miles. After checking online price guides, calling some car lots, and checking recent asking prices of similar cars - I had a pretty good idea what the car was worth and was about to sell it when a friend mentioned checking Carvana.
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.
I used Carvana for the first time this past year and found the experience very good as a buyer.
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 one hand, this is a report from a group that has disclosed it is also shorting the company stock and expects to profit if the value falls.
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.
This is their business model. I remember first hearing about them on their Nikola report. They nailed it. The stock lost 99.93%.
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.
The people who whine about shorts are ridiculous IMO.
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.
The real problem is the SEC has largely abdicated its role to meaningfully prosecute fraud. Short sellers shouldn't be our only real defense against fraud, but that's the reality we (Americans) live in.
How is someone short not incentivised to lie that a company is doing poorly? I can’t see how the incentives change at all. Maybe I’m misunderstanding you.
Agreed that is why auditors, disclosure regulations and companies like hindenburg exist and how public markets should function, they prevent executives from defrauding the public. Keep the accounting clean, lest you invite scrutiny from shorts
The model of funding investigative reporting via shorting is an interesting “hack” when compared to the often conflicted ad based funding we have had historically.
True they have a conflict of interest, but show me equity research that doesn’t have a conflict of interest. The only way to get that is to do it yourself.
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.
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.
What I recall reading was various deep audits following the Hindenburg report disagreeing with their findings. Is it possible those auditors are wrong? Maybe. But I would imagine they spent extra effort given the public scrutiny over all this.
except that the "elites" of india, want to, but cant, breath the air.And, have no possible way to restructure the industry that they are profiting from, which they in no way ,directly manage, operate, or regulate, personaly.
So they are exporting there very sucsessfull business model, worldwide......following the money
....,herds......mooooo.....mooooo....mooooney!
to fresher ,greener(ha!), pasture
Is Hindenburg accurate with their report? I feel like some of the past accusations like against Supermicro are not cut and dry, since accounting firms seem to disagree with their view.
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.
Saying "this company is bad, we have a short in it" is not a new tactic, and is definitely not market manipulation according to the legal definition. Basically they are saying the market price is incorrect, and this is why they think so.
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.
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.