(Reuters) -Investment firm Kerrisdale Capital disclosed a short position in Carvana on Monday, calling it a “poorly capitalized, growth-challenged auto retailer”.
Shares of Carvana have surged nearly 40% after the used-car retailer posted its first annual profit last week, a sharp turnaround powered by cost cuts and a debt-reduction deal with bondholders. On Monday, shares of the company were up about 3% in afternoon trade.
“Carvana’s valuation was already stretched – now, its share price is so ridiculous that it doesn’t just trade at levels unheard of for an auto dealer, it trades at a premium to leading tech companies,” Kerrisdale Capital said in a statement.
Carvana had $2.32 billion in short interest, or 39.6% of its free float in short position, as of Friday, according data and analytics firm Ortex.
“In addition to the disappointing growth outlook, there are signs that further improvement in unit economics is nearing an end,” Kerrisdale Capital said in a statement.
Carvana declined to comment on Kerrisdale’s report.
(Reporting by Kannaki Deka in Bengaluru; Editing by Pooja Desai)
