BTIG has reiterated its Buy rating on Carvana (NYSE: CVNA) and kept a $535.00 price target, even as the shares have come under pressure from circulating allegations about the company’s connection to DriveTime. Carvana is trading at $410.04, reflecting a 67% gain over the past year, but recent volatility has seen the stock slide 14.3% in the last week. Analyst consensus remains positive, with InvestingPro data showing a 1.88 rating (Buy).
The allegations focus on Carvana’s dealings with DriveTime, a private company owned by Ernie Garcia II. Mr. Garcia II is identified as Carvana’s controlling shareholder and is also the father of Carvana co-founder and CEO Ernie Garcia III. Market attention increased after DriveTime’s 10-K was obtained through a Freedom of Information Act request connected to a class action lawsuit against Carvana. BTIG, however, emphasizes that investors were already aware of the related-party relationship between the two firms prior to the recent disclosures.
BTIG analyst Marvin Fong pushed back on several of the technical assertions that have circulated in the market. Specifically, Fong disputed the calculations and interpretations relating to DriveTime’s leverage, servicing fees, write-down logic, and the characterization of cash flow from operations as a profit-and-loss metric. BTIG concluded that the most serious allegations in circulation are "not well-founded," and said that those core claims serve as the basis for many other assertions being made about the online used-car retailer.
Alongside BTIG’s response, other analysts have updated their views and targets for Carvana. BTIG itself moved its price target up to $535 from $450, citing a survey that it said shows rising consumer interest in purchasing used cars online. Deutsche Bank established a new Street-high price target of $600, while BofA Securities raised its target to $515 following Carvana’s expansion into the San Francisco Bay Area via the acquisition of a dealership. Argus initiated coverage with a Buy rating and a $500 price target, pointing to the company’s competitive advantages relative to traditional dealerships.
In addition to analyst action, Carvana has been added to the S&P 500 index, with the inclusion set to take effect on December 22. These developments - price-target increases, new coverage, and index inclusion - are likely to factor into investor attention on the name amid the ongoing scrutiny.
The current episode centers on an intercompany relationship and how that connection is being interpreted by market participants. BTIG’s public defense targets the technical underpinnings of the claims rather than disputing that a related-party relationship exists. The firm’s stance is that the most consequential allegations lack sufficient foundation, and it has chosen to maintain a constructive recommendation while raising its valuation target.
For market participants, the episode reinforces how corporate disclosures, third-party filings and legal activity can interact with analyst models and investor sentiment. The material facts in play are limited to the relationship between Carvana and DriveTime, the FOIA release of DriveTime’s 10-K tied to a class action, the analyst disputes of specific calculations, and the suite of price-target revisions and new coverage by peers.
Investors continue to weigh Carvana’s recent strong one-year performance against the shorter-term pullback and the uncertainty introduced by the allegations. BTIG’s maintained Buy rating and higher target reflect the research team’s view of the company’s position, while other broker actions highlight divergent but generally constructive analyst sentiment.