Key Highlights
- Avis Budget (CAR) plummeted more than 40% Thursday amid eight separate trading halts triggered by volatility.
- Combined losses across two sessions exceed 57%, erasing most of a nearly 600% rally that began in late March.
- Wednesday’s selloff alone generated $2.8 billion in gains for short sellers, offsetting prior three-day losses.
- JPMorgan issued an Underweight rating on CAR with a $165 target, warning fundamentals don’t support the valuation.
- Market observers are drawing parallels to the 2021 GameStop short squeeze phenomenon.
Despite recording an $889 million net loss in 2025 and shouldering $25.3 billion in total liabilities, Avis Budget (CAR) saw shares rocket nearly 600% within weeks. The unwinding has proven equally ferocious.
Shares of CAR declined more than 40% during Thursday’s session. Circuit breakers triggered eight separate trading pauses as extreme price swings rattled the market. Wednesday had already seen a 38% decline, pushing combined losses beyond 57% over the two-day period.
The rental car giant’s shares had climbed from below $100 in late March to touch nearly $850 during early Wednesday trading. The meteoric rise was fueled by a short squeeze. What ensued represents one of the most dramatic reversals witnessed in recent market history.
By late Thursday morning, CAR shares were changing hands around $265.
Short Positions See Massive Swing
Bearish traders absorbed substantial punishment during the upward surge. Estimates suggest short sellers accumulated approximately $2.7 billion in losses across three trading days as shares rocketed higher.
Wednesday’s sharp reversal delivered $2.8 billion in single-day profits to short positions, based on S3 Partners analytics. The squeeze mechanism has essentially unwound.
Options market activity reached frenzied levels at the peak. More than 200,000 contracts changed hands during Wednesday’s session alone. Implied volatility skyrocketed to 235%, dwarfing the S&P 500’s roughly 20% reading.
Charles Schwab implemented stricter margin protocols on April 9. Accounts holding concentrated positions in CAR now face 100% margin requirements, effectively mandating full cash funding for transactions.
Wall Street Downgrades Amid Fundamental Concerns
JPMorgan analyst Ryan Brinkman lowered his rating on CAR from Neutral to Underweight Thursday morning. His price objective moved to $165 from a previous $123 target.
While increasing his target by 34%, Brinkman emphasized the stock had climbed “far above the level we feel can be justified by even the most optimistic view of underlying earnings fundamentals.”
He recognized management might capitalize on elevated valuations through capital market activities, though maintained this prospect alone couldn’t warrant a neutral stance.
Analysis from research firm Fugazi highlighted concerning metrics. Despite generating $11.65 billion in annual revenue during 2025, Avis recorded an $889 million net loss. This followed a $1.8 billion deficit in 2024.
Total indebtedness reaches $25.3 billion. Stockholders’ equity sits at negative $3.1 billion. The company produces approximately $0.56 in operating earnings for each $1.00 of interest obligations.
Two major institutional players occupy central roles in this saga. SRS Investment Management accumulated its stake over nine years through debt-financed float engineering, positioning its own partners as CEO and Executive Chairman. Pentwater Capital Management transitioned to unhedged long positions in March 2026 via its Merger Arbitrage Master Fund.
Combined, their total economic exposure surpassed 100% of CAR’s available float. With merely 36 million shares outstanding and fewer still available for public trading, circumstances were primed for an explosive squeeze.
Over the past two sessions alone, more than 10 million CAR shares have changed hands.
Avis Budget plans to release first quarter 2026 financial results on April 29 at 7:00 a.m. Eastern, with a subsequent investor conference call scheduled for 8:30 a.m. Eastern.
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