Over the past month, investors have seen Carvana (NYSE:CVNA) shares fall over 20%, while retail investor sentiment on Reddit and X shifted from cautious optimism to deeply bearish. The stock trades a little over $360 today, down from almost $490 weeks earlier. The selloff intensified after Gotham City Research published a report at the end of January, alleging that Carvana overstated earnings by more than $1 billion through undisclosed related-party transactions with DriveTime and Bridgecrest. The company dismissed the claims as “inaccurate and intentionally misleading,” but multiple law firms launched securities class-action investigations, which immediately damaged investor confidence.
Reddit Traders Demand Transparency Before Earnings
Carvana mentions on Reddit spiked following the fraud allegations, with discussions shifting to outright skepticism. On r/stocks, users are calling for management to address accounting concerns before the February 18, 2026, earnings release. One widely discussed post titled “Carvana CVNA Should Delay Earnings Report and Come Clean on Accounting Discrepencies” captured the mood, arguing that continued silence will worsen legal exposure. The post stated: “Management needs to come clean before earnings. The longer they wait, the worse the legal exposure gets. Investors deserve answers about these related-party transactions.”
Carvana CVNA Should Delay Earnings Report and Come Clean on Accounting Discrepencies
by a Reddit user in stocks
The concerns focus on three issues:
- Alleged $1 billion earnings inflation tied to DriveTime and Bridgecrest transactions
- Coordinated insider selling totaling over $500 million in recent months, including 24,500+ shares sold by executives on February 2 alone
- Premium valuation of 83x trailing earnings, far exceeding tech giants like Apple
Record Sales Meet Mounting Skepticism
On the plus side, Carvana’s operational performance remains strong as the company reported Q3 2025 revenue of $5.65 billion, with retail units up 44% year over year, and analysts project full-year 2026 earnings of $5.48 per share, up 244.65%. Yet the stock trades at a significant premium when compared to CarMax (NYSE:KMX), which trades at a 15x PE despite operating in the same market. For investors, the question is whether record sales can outrun questions about financial transparency. With earnings on Wednesday, February 18, 2026, the market will watch not just the numbers but also whether management directly addresses the allegations that have dominated social sentiment for weeks.
Data Sources
- Zacks Investment Research: Used for Q3 2025 revenue figures, retail unit growth data, and analyst consensus ratings
- Zacks Investment Research: Used for full-year 2026 earnings projections and forward PE ratio context
- Zacks Investment Research: Used for upcoming earnings release date and analyst estimate revisions
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