Key Takeaways
- Avis Budget (CAR) plummeted more than 40% on Thursday, triggering eight separate trading halts throughout the session.
- Combined losses over two consecutive days exceeded 57%, erasing gains from a nearly 600% rally that began in late March.
- Bearish traders captured $2.8 billion in profits on Wednesday, offsetting previous three-day losses.
- JPMorgan issued an Underweight rating on CAR with a $165 target price, highlighting overextended valuation metrics.
- Market observers are drawing parallels to the 2021 GameStop trading frenzy.
Despite reporting an $889 million net loss in 2025 and shouldering $25.3 billion in total liabilities, Avis Budget (CAR) experienced an unprecedented 600% surge over several weeks. The subsequent unwinding proved equally dramatic.
Shares of CAR collapsed more than 40% during Thursday’s session. Circuit breakers triggered eight separate trading pauses as volatility reached extreme levels. This followed Wednesday’s 38% decline, creating a combined two-day loss exceeding 57%.
The rental car company’s shares had rocketed from below $100 in late March to an all-time peak approaching $850 during early Wednesday trading. The explosive rally was fueled by a short squeeze. The subsequent reversal ranks among the most dramatic in recent market history.
By Thursday’s late morning hours, CAR shares were changing hands near $265.
Bears Recoup Massive Losses
Bearish investors endured substantial pain during the initial rally phase. Estimates suggest short sellers absorbed approximately $2.7 billion in losses across three trading days as shares squeezed upward.
Wednesday’s dramatic selloff delivered $2.8 billion in returns to short positions during just one session, based on S3 Partners analytics. The squeeze dynamic has now completely unwound.
Derivatives trading reached frenzied levels at the peak. Wednesday alone saw more than 200,000 options contracts change hands. Implied volatility skyrocketed to 235%, drastically outpacing the S&P 500’s roughly 20% reading.
Charles Schwab implemented stricter margin policies on April 9. Investors maintaining concentrated CAR holdings now face 100% margin requirements, effectively mandating full cash backing for all transactions.
Wall Street Analyst Cuts Rating, Questions Valuation
JPMorgan’s Ryan Brinkman downgraded CAR from Neutral to Underweight on Thursday, establishing a $165 price objective elevated from the previous $123 target.
While raising his target by 34%, Brinkman stated the stock had climbed “far above the level we feel can be justified by even the most optimistic view of underlying earnings fundamentals.”
He noted management might leverage the inflated valuation for capital market activities, though this consideration wasn’t sufficient to maintain even a neutral stance.
Analysis from research firm Fugazi highlighted concerning financial metrics. Avis produced $11.65 billion in top-line revenue during 2025 while recording an $889 million net loss. This followed 2024’s $1.8 billion deficit.
Total indebtedness reaches $25.3 billion. Stockholders’ equity registers at negative $3.1 billion. The enterprise generated approximately $0.56 in operating earnings per $1.00 of interest obligations.
Two major institutional players occupy central roles in this narrative. SRS Investment Management accumulated its stake over nine years through debt-financed float engineering, placing its partners in the CEO and Executive Chairman positions. Pentwater Capital Management transitioned to unhedged long positions in March 2026 via its Merger Arbitrage Master Fund.
Collectively, their economic exposure surpassed 100% of CAR’s available float. With merely 36 million shares outstanding and an even smaller freely tradable supply, conditions became ripe for an explosive squeeze.
The previous two sessions alone witnessed over 10 million CAR shares traded.
Avis Budget plans to announce first quarter 2026 financial results on April 29 at 7:00 a.m. Eastern time, with a conference call scheduled for 8:30 a.m. Eastern time.
