TLDR
- Avis Budget (CAR) dropped over 40% Thursday, with trading halted eight times due to volatility.
- The two-day selloff totals more than 57%, reversing a nearly 600% surge since late March.
- Short sellers made $2.8 billion on Wednesday alone, recovering losses from the preceding three days.
- JPMorgan downgraded CAR to Underweight with a $165 price target, citing stretched fundamentals.
- The episode is drawing comparisons to the GameStop short squeeze of 2021.
Avis Budget (CAR) posted a $889 million net loss in 2025 and carries $25.3 billion in total debt. The stock still managed to run nearly 600% in weeks. Now the unwind is just as violent.
CAR fell more than 40% on Thursday. Trading was halted eight times due to extreme volatility. The stock had already dropped 38% the day before, bringing the two-day loss to over 57%.
The stock had surged from under $100 in late March to a record high near $850 in early Wednesday trading. That run was driven by a short squeeze. What followed was one of the sharpest reversals in recent memory.
By late Thursday morning, CAR was trading around $265.
The Short Seller Scorecard
Short sellers took heavy losses on the way up. Over three days, they lost an estimated $2.7 billion as the stock squeezed higher.
Wednesday’s collapse handed them $2.8 billion in profits in a single session, according to data from S3 Partners. The squeeze has effectively reversed.
Options activity during the peak was extreme. Over 200,000 contracts traded on Wednesday alone. Implied volatility hit 235%, compared to around 20% for the S&P 500.
Charles Schwab changed margin requirements on April 9. Traders with concentrated CAR positions are now required to post 100% margin, meaning trades must be done entirely in cash.
JPMorgan Downgrades, Fundamentals in Focus
JPMorgan analyst Ryan Brinkman downgraded CAR from Neutral to Underweight on Thursday. He set a price target of $165, raised from $123.
Despite lifting the target by 34%, Brinkman said the stock had risen “far above the level we feel can be justified by even the most optimistic view of underlying earnings fundamentals.”
He acknowledged management could use the elevated price to pursue capital market transactions, but said that alone wasn’t enough to hold a neutral rating.
Research firm Fugazi pointed to the numbers. Avis generated $11.65 billion in annual revenue in 2025 but posted an $889 million net loss. That followed a $1.8 billion loss in 2024.
Total debt stands at $25.3 billion. Stockholders’ equity is negative $3.1 billion. The company generated roughly $0.56 in operating earnings for every $1.00 of interest owed.
Two institutional investors sit at the center of this story. SRS Investment Management built its position over nine years through debt-funded float engineering, installing its own partners as CEO and Executive Chairman. Pentwater Capital Management shifted to unhedged long exposure in March 2026 through its Merger Arbitrage Master Fund.
Together, their combined economic exposure exceeded 100% of CAR’s total float. With only 36 million shares outstanding and even fewer available for trading, the conditions for a violent squeeze were set.
In the last two days alone, over 10 million CAR shares traded hands.
Avis Budget is scheduled to report first quarter 2026 results on April 29 at 7:00 a.m. Eastern, followed by an investor call at 8:30 a.m. Eastern.
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