So what is happening with CVNA stock? Carvana posted its third straight net profit in Q3. Its earnings came at about $1.26 per share, a drop of 65% year-over-year (y-o-y), but that was still much better than had been feared.

Carvana stock more than tripled in 2024, extending a two-year bull run that's returned 4,000% amid a turnaround effort that has pulled the online used-car retailer from the brink of bankruptcy.

It's easy to see why Carvana would attract the attention of a short-seller. The stock has surged since its bottom at the end of 2022, slashing costs through layoffs and refinancing, and returning the business to profitability after years of rapid but unprofitable growth and overextending itself with acquisitions.

Carvana, the online used-car retailer that last week was the target of a short-selling research report, got its first broker upgrade since then which says the controversy has sparked a buying opportunity.

Acknowledging that there is skepticism surrounding its business model and ability to sustain profitability targets, RBC Capital joins the growing list of bulls in support of Carvana, raising its rating on the stock to Outperform from Sector Perform on the upside potential to retail unit estimates and a clearer path to durable free cash flow.