Shares of Carvana (CVNA) tumbled 9% following a report from short seller Gotham City Research. The firm alleges that the online used-car retailer has a $1 billion accounting gap. The report claims Carvana’s earnings are overstated and that the company is more reliant on related-party transactions than disclosed. This caused immediate investor concern.

Gotham City specifically pointed to the relationship between Carvana and DriveTime, controlled by the father of Carvana's CEO. The short seller also criticized Carvana’s loan sales practices and fees charged by Bridgecrest, a company fully owned by the same individual. The report predicts potential delays to Carvana's filings and restatements.

This is a significant blow to Carvana, which has been working to rebuild investor confidence. A negative report from a prominent short seller can lead to a considerable price decline. Investors will be watching closely to see how Carvana responds to these serious accusations. The company has not yet commented on the report.