Carvana Co. (NYSE:CVNA) has been a rollercoaster for investors, with a jaw-dropping 327% rally over the past year overshadowed by a 21.97% dip in the last month.

But behind the flashy headlines is a stock chart showing signs of fatigue.

Chart created using Benzinga Pro

Carvana Stock Chart: All Signals Point South

Carvana's stock has dropped below key simple moving averages (Eight, 20 and 50-day), a textbook sign of a bearish trend. Adding to the challenges:

• The stock's price of $199.56 is far below its eight-day SMA of $212.33, signaling bearish short-term momentum.
• The gap widens with the 20-day SMA at $231.15 and the 50-day SMA at $235.49, adding further technical pressure.
• While the 200-day SMA at $154.62 suggests a bullish longer-term outlook, it offers little solace to short-term traders facing the current downturn.

With a MACD of negative 10.08 and an RSI of 28.03, Carvana's stock is officially in oversold territory. But oversold doesn't always mean a bargain—sometimes it's just a sign of more trouble ahead.

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Hindenburg Hits The Brakes

SShort-seller Hindenburg Research's critical report intensifies bearish sentiment, describing Carvana's turnaround a "mirage." Accusations of "accounting manipulation" and "lax underwriting" may not be new, but the timing is impeccable. After all, Carvana has been trading at lofty valuations:

• Forward P/E of 101—a staggering premium to rivals like CarMax Inc (NYSE:KMX) and AutoNation Inc (NYSE:AN).
• Sales multiples 845% higher than its peers.

Hindenburg even claims the company is inflating its valuation through $800 million in loan sales to a "suspected undisclosed related party" and cites insider selling as further evidence of an overheated stock.

Carvana, however, dismissed Hindenburg's report as "misleading and inaccurate," reiterating confidence in its 2025 growth plan, as they responded to Benzinga.

What Does This Mean For Investors?

Despite the short report, Carvana shares showed resilience, bouncing back by over 3% on Thursday after a brief dip. But the bigger question is: can the stock sustain its gains, or is this a dead-cat bounce?

With strong selling pressure and a technical setup favoring bears, investors should tread carefully. While oversold conditions can tempt bottom-fishers, the ongoing bearish signals and fundamental concerns from Hindenburg's report suggest Carvana might be stuck in reverse for now.

For those still holding CVNA, it might be time to brace for turbulence as challenges may lie ahead.

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