TLDR
- Avis Budget Group (CAR) stock has risen 264% over the past month, vastly outperforming the S&P 500’s 2.8% gain over the same period.
- A short squeeze appears to be a key driver, with short interest representing more than 26% of Avis’s public float.
- TSA staffing shortages snarling U.S. airports pushed travelers toward rental cars, boosting near-term demand expectations for both Avis and rival Hertz.
- Deutsche Bank downgraded CAR from Buy to Hold with a $128 price target, while the broader Wall Street consensus sits at Hold with a mean target of $106.43 — far below recent trading prices.
- CAR’s financials remain under pressure: the company posted a Q4 loss of $4.60 per share, carries roughly $8.66B in long-term debt, and recorded a net loss of around $747M in its most recent results.
Avis Budget Group (CAR) stock has become one of the more unusual stories in the market this year. In roughly four weeks, the stock climbed from around $100.44 to $333.40 — a gain of more than 264%. The S&P 500 rose just 2.8% over the same stretch.
Tuesday brought a pause. CAR fell 7.6% in Tuesday trading after gaining 24% on Monday. The stock touched a high of $334.39 before pulling back.
The run started getting attention in late March, when TSA staffing shortages caused by a partial government shutdown led to longer airport security lines. With delays piling up, more travelers opted to drive, steering demand toward rental car companies.
Both Avis and rival Hertz (HTZ) benefited. Hertz stock climbed roughly 56% over the past month. On some days, CAR and HTZ moved together — one session saw Avis up more than 14% alongside Hertz as traders priced in higher near-term rental demand.
Short Squeeze Fueling the Fire
But the airport disruption story only explains part of the move. Analysts and market observers point to a short squeeze as a major factor.
Short interest in CAR stood at more than 26% of the public float as of Tuesday. When heavily shorted stocks begin to rise, short-sellers are forced to buy back positions to limit losses, which drives prices even higher.
Deutsche Bank analyst Chris Woronka noted earlier this month that there could be more upside from the squeeze. He linked recent trading activity to hedge fund Pentwater Capital Management. Pentwater did not respond to requests for comment.
This isn’t the first time CAR has been caught up in a squeeze. In November 2021, the stock surged 110% in a single day after earnings hinted at a post-COVID rebound in travel demand.
Wall Street Is Not Convinced
Despite the price action, Wall Street’s view on the stock remains cautious. Deutsche Bank downgraded CAR from Buy to Hold and set a price target of $128. The broader analyst consensus also sits at Hold, with a mean target of $106.43.
Both targets are a long way below where the stock has recently been trading.
The company’s financials do little to justify the current levels on their own. CAR posted a Q4 loss of $4.60 per share, wider than what analysts had expected. Revenue for the quarter slipped 2% year over year to $2.66 billion.
Over the past year, CAR generated roughly $11.65 billion in revenue with an EBITDA margin near 12.7%. But net margins are negative, weighed down by a $518 million impairment charge and heavy interest costs. Long-term debt sits at around $8.66 billion, and the company’s most recent results show a net loss of approximately $747 million.
The stock opened near $288 on Monday, April 13, and finished above $333 — closing near the day’s highs after repeatedly breaking through resistance in the $310–$325 range.
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