Latest news with #shortselling
Forbes
4 hours ago
- Automotive
- Forbes
Famed Short Seller Jim Chanos Is Betting Against Used Car Retailer Carvana And AI Losers Like IBM
Jim Chanos (left) speaks with Forbes editor Matt Schifrin on stage at the 2025 Forbes Iconoclast Summit. When legendary investor Jim Chanos entered the stage at the 2025 Forbes Iconoclast Summit Thursday, he had a big smile on his face thanks to the very public feud that had erupted behind President Donald Trump and the world's richest person, Tesla CEO Elon Musk. Chanos, who first shorted Tesla stock back in 2016, said of the spat: 'Most predictable breakup ever.' With a long and successful track record of betting against overpriced or fraudulent companies, Chanos' latest big short is used-car retailer Carvana. Just as intriguing, he's also looking to short companies that will lose out in the race for artificial intelligence. 'Carvana is a misunderstood story: The Street believes it is an epic turnaround, but in fact, the company is still losing money,' said Chanos. 'Although it is priced as a growth stock, the business is cyclical.' He pointed, for instance, to how, in mid-2023, its core business dropped by more than 30% year-over-year, when there was a slight slowdown in the economy. Chanos noted the Street's is focusing on the company's gross profit margins. But, he argued, those margins are a product of aggressive accounting that inflates both unit economics and corporate profitability while excluding many components that other auto dealers typically include. 'Carvana is making all this money in finance, not selling cars,' explained Chanos. 'They are a subprime lender.' Carvana has booked big gains on selling subprime loans to affiliates and non affiliates, which represent 122% of their income in the latest quarter. Carvana's stock has a history of wild swings. The company originally went public in 2017 at $15 per share, raising $225 million. A pandemic-era darling, the stock hit an all-time high of around $370 per share in early 2021 during the auto-supply chain crisis, but tanked shortly after and by 2022 had fallen to below $5 per share amid reports that the company was on the brink of bankruptcy following its $2.2 billion acquisition of auction business ADESA. The following year, with its stock still languishing in the single digits, the company announced a debt and equity raise in a move that S&P Global called, 'tantamount to default.' By mid-2024, the stock had rallied back above $100 per share and continued to rise, hitting roughly $250 by the end of the year. So far this year, Carvana is up 70% to $343 per share, rallying massively since a low point of $162 per share in early April when the market tanked following President Trump's tariff announcements. The bull case behind the most recent rally: Auto tariffs will hurt new car sales, giving Carvana more market share. Now, in June 2025, the company's enterprise value has hit $73 billion, near an all-time high. One good indicator of a looming correction, according to Chanos, is that the short interest on Carvana stock is back down to multi-year lows of below 10%, a marked turnaround from being one of the most heavily shorted stocks in the market during 2023. 'Perhaps more ominous is that insiders have begun to sell an absolute torrent of stock—pretty much the whole C-suite is getting out seemingly as fast as they can,' he said. 'This is really a company at the end of the whip for retail consumers.' Some $1.7 billion worth of stock was sold by company executives in May, filings show. Chanos famously predicted energy company Enron's collapse in 2001, shorting the company months before a large accounting scandal destroyed investor confidence and led to bankruptcy. He also gained fame with profitable bets against payments company Wirecard, which in 2020 admitted to billions of euros on its books that 'did not exist' and resulted in insolvency. Not all of his bets have had such success, however. Chanos famously took a short position against electric vehicle maker Tesla in 2016, but reduced the position in 2020 before the company was added to the S&P 500 index. In the following years, his other short positions included Live Nation, International Business Machines, Block and General Electric, among others. None matched his Enron and Wirecard successes. In late 2023, Chanos closed down the hedge funds he managed that shorted overpriced or fraudulent companies, citing dwindling assets and a long/short equity business model that was increasingly coming under pressure. Converting it into a family office, he now no longer manages capital but continues to advise clients at Chanos & Co., the firm he founded in 1985 as Kynikos Associates. Chanos also told the Iconoclast audience that he is shorting several companies that have benefitted from the hype around AI but will lose out in the future, such as 'IT body shops' like IBM. He likened this investing theme to the dot-com bubble, which burst in 2000. Back then, he successfully shorted companies he believed wouldn't survive the technological transition, such as Blockbuster Video (the pre-Netflix movie rental chain) and Kodak (the film and camera pioneer that went bankrupt after the transition to digital photography). 'We were short almost all those types of companies back then,' Chanos said. 'We're doing our work now but we think there are a number of companies that similarly pop up and are going to be roadkill on the AI highway.' IT consultants and body shops will see their businesses melt away, he predicted. 'We're puzzled by some of them because they are getting valuations similar to AI type companies when even a cursory look at their business model shows they might be in a lot of trouble,'' he added. One of Chanos' older names within that group is IBM, which he has been short on and off since 2020. 'The company is not growing but trading at all-time high valuations,' he said, noting that the 'antiquated software' it maintains for its clients will likely become obsolete.
Reuters
7 days ago
- Business
- Reuters
US court finds enough evidence to proceed with Grifols lawsuit against Gotham City
MADRID, May 30 (Reuters) - A New York court found enough evidence to continue with the defamation lawsuit filed by Spanish pharmaceutical company Grifols ( opens new tab against short seller Gotham City Research, Grifols said in a statement on Friday. Based on its findings, the Federal District Court for the Southern District of New York rejected a request filed by Gotham City to dismiss the lawsuit, Grifols said. In January 2024, Gotham, which had previously shorted Grifols shares, released a report accusing the company of overstating earnings and understating debt. Grifols denied the allegations but lost around a third, opens new tab of its market value following the report. Shorting involves borrowing shares in order to sell them, with the hope of buying them back more cheaply to make a profit. According to Grifols, the court also found that Grifols adequately argued that Gotham City's report contained false statements, such as that the company had failed to disclose a $95 million loan to Scranton Enterprises. Gotham City did not immediately respond to a request for comment.
Bloomberg
23-05-2025
- Business
- Bloomberg
Andrew Left's New Lawyer Says Case Doesn't Fit Trump Priorities
Short seller Andrew Left is making a new push to sway the US Justice Department to drop fraud charges filed against him last year, hiring a former federal prosecutor to make fresh arguments directly to the Trump administration. The strategy hinges on convincing the Justice Department that the case against Left isn't in line with President Donald Trump's enforcement priorities. It's an argument that could gain traction with a department that has already dropped some criminal cases as a result of the president's directives.
Bloomberg
20-05-2025
- Business
- Bloomberg
Short Seller Challenges Jimmy Fallon to $1 Million Air Taxi Bet
Air taxi company Archer Aviation Inc. has been targeted by short sellers before, but Culper Research has added an unusual twist to its report: A proposed $1 million 'friendly wager' with the TV show host Jimmy Fallon. New York-based Culper has alleged that Archer 'systematically lied' about the progress of its flagship vehicle and paid 'millions' to secure a May 15 appearance on 'The Tonight Show' with Fallon, who a month earlier had attended a promotional event for the company in New York City.
Globe and Mail
16-05-2025
- Business
- Globe and Mail
Investor Michael Burry Bets Against Nvidia Stock (NVDA)
Closely followed Investor Michael Burry has bet against leading chipmaker Nvidia (NVDA). Confident Investing Starts Here: Quickly and easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter Burry, who successfully bet against the subprime mortgage market and was profiled by author Michael Lewis in the book 'The Big Short,' has now turned bearish on NVDA stock. According to his latest 13-F regulatory filing with the U.S. Securities and Exchange Commission (SEC), Burry's investment firm Scion Asset Management opened put calls on Nvidia's stock during this year's first quarter. Puts are bets that a share price will decline over a period of time. Burry's bet appears to have been a successful one as NVDA stock fell 37% from January through the beginning of April. Nvidia's share price has since rebounded and its market capitalization is again above $3 trillion. It is not known if Burry continues to be short Nvidia stock or if he has ended the trade. The 13-F forms are backward looking and show the moves of investors in the previous quarter. The SEC requires all investment managers that hold over $100 million in securities to disclose their positions in quarterly filings known as 13-Fs. Bearish on China Nvidia was not the only stock that Michael Burry shorted during Q1 of this year. The well-known investor also turned bearish on Chinese stocks during the quarter, buying bearish puts on shares of Chinese stocks which he had previously been accumulating. The Chinese stocks that Burry shorted include Alibaba (BABA), Baidu (BIDU), and (JD), three of China's best known and well-regarded technology firms. The only long position remaining in Burry's concentrated portfolio is Estee Lauder Cos. (EL). The investor sold all his other stocks. Is NVDA Stock a Buy? The stock of Nvidia has a consensus Strong Buy rating among 40 Wall Street analysts. That rating is based on 34 Buy, five Hold, and one Sell recommendations assigned in the last three months. The average NVDA price target of $164.51 implies 22.01% upside from current levels.
