Key Takeaways
- Avis Budget (CAR) plummeted more than 40% on Thursday, triggering eight separate trading halts amid extreme market volatility.
- The combined two-day decline exceeds 57%, erasing much of the nearly 600% rally that began in late March.
- Short sellers generated $2.8 billion in profits on Wednesday alone, offsetting losses from the prior three trading days.
- JPMorgan issued an Underweight rating on CAR with a $165 price target, warning fundamentals don’t support current valuations.
- Market observers are drawing parallels to the 2021 GameStop short squeeze phenomenon.
Despite reporting an $889 million net loss in 2025 and shouldering $25.3 billion in total debt, Avis Budget (CAR) managed to skyrocket nearly 600% over a matter of weeks. The unwinding has proven equally brutal.
Shares of CAR tumbled more than 40% during Thursday’s session. Regulators paused trading eight separate times as volatility safeguards kicked in. This followed Wednesday’s 38% decline, pushing the combined two-day loss beyond 57%.
The rental car company’s shares had climbed from below $100 in late March to an all-time peak approaching $850 during early Wednesday trading. The meteoric rise was fueled by a short squeeze. The subsequent reversal ranks among the most dramatic in recent market history.
By late Thursday morning, CAR shares were changing hands near $265.
Short Sellers Recoup Massive Losses
Investors betting against the stock endured significant pain during the upward surge. Estimates suggest short sellers absorbed approximately $2.7 billion in losses across three trading days as the squeeze intensified.
Wednesday’s dramatic selloff delivered $2.8 billion in profits to short sellers in just one session, based on analytics from S3 Partners. The squeeze dynamics have now completely reversed.
Options trading reached feverish levels at the peak. More than 200,000 contracts changed hands on Wednesday. Implied volatility soared to 235%, dramatically outpacing the S&P 500’s roughly 20% reading.
Charles Schwab implemented new margin rules on April 9. Clients holding concentrated CAR positions now face 100% margin requirements, effectively mandating all-cash transactions.
JPMorgan Issues Downgrade, Questions Fundamental Support
JPMorgan analyst Ryan Brinkman lowered his rating on CAR from Neutral to Underweight on Thursday. His new price target of $165 represents an increase from the previous $123 target.
Even after increasing the 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.”
While acknowledging management might leverage the inflated share price for capital market opportunities, Brinkman indicated this wasn’t sufficient justification for maintaining a neutral stance.
Analysis from research firm Fugazi highlighted concerning metrics. Avis produced $11.65 billion in annual revenue for 2025 while recording an $889 million net loss. This followed a $1.8 billion deficit in 2024.
The company’s debt burden totals $25.3 billion. Stockholders’ equity sits at negative $3.1 billion. Operating earnings cover approximately $0.56 for every $1.00 in interest obligations.
Two major institutional players occupy center stage in this narrative. SRS Investment Management accumulated its stake over nine years using debt-funded float engineering strategies, placing its partners in the CEO and Executive Chairman roles. Pentwater Capital Management transitioned to unhedged long positions in March 2026 via its Merger Arbitrage Master Fund.
Combined, their economic exposure surpassed 100% of CAR’s available float. With merely 36 million shares outstanding and even fewer actively trading, the stage was set for an explosive squeeze.
Volume over the past two sessions alone exceeded 10 million CAR shares.
Avis Budget is set to announce first quarter 2026 earnings on April 29 at 7:00 a.m. Eastern time, with a conference call scheduled for 8:30 a.m. Eastern.
