Key Takeaways
- CAR stock jumped 10% to reach $235, propelled by aggressive call option activity and short squeeze pressure
- Shares have skyrocketed 118% in the past month, trading on a limited float of only 13.05 million shares
- Hertz (HTZ) climbed 8% to $5.70, riding similar options-fueled momentum
- Analysts maintain a bearish “Reduce” consensus rating with average price targets around $115
- The company posted Q4 FY2025 EPS of -$21.25, impacted by a $518M electric vehicle impairment charge
Avis Budget Group (CAR) delivered dramatic price action on Tuesday. Shares rocketed from $212.60 to an intraday peak of $235 — a robust 10% climb powered predominantly by options market dynamics and short covering activity.
This represents just the latest surge in a remarkable month-long rally that has propelled CAR up 118% entering Tuesday’s trading session. The stock established a new 52-week high at $214.84 before accelerating to even loftier levels.
Hertz (HTZ) participated in the rally as well, advancing 8% from $5.31 to $5.70 on comparable call option demand. These two car rental companies frequently trade in tandem — sharing sector exposure, debt-laden balance sheets, and elevated short interest characteristics.
The dynamics surrounding CAR exhibit classic squeeze characteristics. When substantial call option buying targets a stock with limited liquidity, market makers must hedge their exposure by purchasing shares, driving prices higher and attracting additional traders, which generates further hedging requirements. The cycle perpetuates itself.
CAR operates with a float of merely 13.05 million shares and total shares outstanding of just 35.26 million. This represents extremely limited supply. When elevated short interest meets concentrated call buying in such a constrained name, price movements can become explosive.
The Bull and Bear Arguments
The optimistic thesis is straightforward: price momentum, historical squeeze precedents, and conviction that the path of least resistance remains upward.
The pessimistic case carries more substantive evidence. Avis disclosed Q4 FY2025 earnings per share of -$21.25, a dramatic shortfall versus the -$0.23 analyst estimate. The company shoulders $6.1 billion in corporate debt obligations and reports negative shareholders’ equity of -$3.129 billion. A substantial $518 million electric vehicle impairment charge severely impacted quarterly results.
Wall Street’s analyst community maintains a “Reduce” consensus recommendation with average price objectives at $115 — representing less than 50% of current trading levels. Goldman Sachs projects an $85 target. Morgan Stanley sits at $97. Barclays reduced their target to $95. Deutsche Bank upgraded to Hold with a $128 price target.
This substantial gap between current prices and analyst projections actually sustains the squeeze momentum. Bears maintaining short positions will ultimately need to purchase shares to close those positions — providing additional upward fuel for bullish traders.
Ownership Patterns and Insider Moves
Not all institutional players are avoiding the stock. Pentwater Capital Management acquired 425,000 shares during February at an average cost of $94.26 per share, representing a $40 million investment and expanding their position by 11.9%.
Company insiders control 52.8% of outstanding shares, while institutional investors hold 96.35% of the equity.
In a related development, Avis disclosed an at-the-market equity offering program permitting the sale of up to 5 million shares — a plan that initially triggered a 10% stock decline when first announced.
Avis’s 50-day moving average stands at $116.57 while its 200-day moving average registers $130.71, both positioned significantly below current price levels.
The company carries a market capitalization of $7.50 billion and posts a beta of 1.94, underscoring the considerable volatility inherent in this security.
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