Key Takeaways
- Shares of Avis Budget Group (CAR) have surged 264% in the past month, significantly outpacing the S&P 500’s modest 2.8% increase during the same timeframe.
- A massive short squeeze is fueling much of the rally, with short positions exceeding 26% of the company’s available public float.
- Transportation Security Administration (TSA) staffing issues at airports across the United States drove travelers to choose rental vehicles, increasing immediate demand forecasts for Avis and competitor Hertz.
- Analysts at Deutsche Bank cut their rating on CAR from Buy to Hold, establishing a $128 price objective, while the overall Street consensus remains at Hold with an average target of $106.43 — substantially below current market levels.
- The company’s underlying financial performance remains challenged: Avis reported a fourth-quarter loss of $4.60 per share, maintains approximately $8.66B in long-term obligations, and recorded a net deficit of roughly $747M in recent quarterly results.
Avis Budget Group (CAR) stock has emerged as one of 2025’s most peculiar market narratives. Over approximately one month, shares rocketed from roughly $100.44 to $333.40 — representing an extraordinary gain exceeding 264%. By comparison, the S&P 500 index advanced a mere 2.8% during the identical period.
The momentum hit a speed bump on Tuesday. CAR shares declined 7.6% during Tuesday’s session following a 24% surge on Monday. The stock reached an intraday peak of $334.39 before retreating.
The initial catalyst for this dramatic ascent emerged in late March, when Transportation Security Administration personnel shortages — stemming from a partial federal government shutdown — created extensive security checkpoint delays at airports nationwide. Faced with mounting wait times, increasing numbers of travelers chose to drive instead, redirecting demand toward rental car providers.
Both Avis and competing rental company Hertz (HTZ) capitalized on this shift. Hertz shares appreciated approximately 56% throughout the past month. During certain trading sessions, CAR and HTZ exhibited correlated movement — one particular day witnessed Avis climbing over 14% in tandem with Hertz as market participants incorporated expectations of elevated near-term rental activity.
Short Interest Amplifying the Rally
However, the airport-related disruption narrative accounts for only a portion of this extraordinary price movement. Market analysts and industry watchers identify a short squeeze as a primary accelerant.
Short interest in CAR represented over 26% of the publicly available float as of Tuesday. When stocks with substantial short positions begin ascending, short-sellers face pressure to repurchase shares to contain mounting losses, which subsequently propels prices even higher.
Deutsche Bank analyst Chris Woronka observed earlier this month that additional upside from the squeeze mechanism remained possible. He connected recent trading patterns to hedge fund Pentwater Capital Management. Pentwater declined to provide commentary when contacted.
This scenario marks not the first instance of CAR experiencing squeeze dynamics. During November 2021, the stock exploded 110% within a single trading session following earnings results that suggested a post-pandemic recovery in travel activity.
Analyst Community Remains Skeptical
Notwithstanding the dramatic price appreciation, the investment community’s perspective on CAR remains reserved. Deutsche Bank reduced its rating from Buy to Hold while establishing a $128 price objective. The collective analyst consensus similarly rests at Hold, featuring a mean price target of $106.43.
Both projections represent significant discounts to the stock’s recent trading range.
The company’s fundamental financial position offers limited support for current valuation levels. CAR disclosed a Q4 loss of $4.60 per share, exceeding analyst loss projections. Quarterly revenue declined 2% on a year-over-year basis to $2.66 billion.
Across the trailing twelve months, CAR produced approximately $11.65 billion in total revenue with an EBITDA margin approaching 12.7%. Nevertheless, net profitability margins remain in negative territory, burdened by a $518 million impairment expense and substantial borrowing costs. Long-term indebtedness stands at approximately $8.66 billion, while the company’s latest quarterly filing reflects a net loss approaching $747 million.
Shares commenced trading near $288 on Monday, April 13, ultimately settling above $333 — closing near session highs after repeatedly penetrating resistance in the $310–$325 zone.
