Key Highlights
- Avis Budget (CAR) shares have skyrocketed 264% in the past month, dramatically outpacing the S&P 500’s modest 2.8% advance during the same timeframe.
- A powerful short squeeze is believed to be driving much of the rally, with short positions accounting for over 26% of the company’s freely traded shares.
- Transportation Security Administration staffing challenges disrupting major U.S. airports have driven travelers toward car rentals, lifting demand expectations for Avis and competitor Hertz.
- Deutsche Bank cut its rating on CAR from Buy to Hold and assigned a $128 price target, while the overall Street consensus remains at Hold with an average target of $106.43 — significantly below current trading levels.
- The company’s financial health shows strain: CAR reported a Q4 loss of $4.60 per share, maintains approximately $8.66B in long-term obligations, and recorded a net deficit of roughly $747M in recent filings.
Avis Budget Group (CAR) has emerged as one of 2025’s most surprising market performers. Over approximately four weeks, shares rocketed from around $100.44 to $333.40 — representing an extraordinary surge of more than 264%. Meanwhile, the S&P 500 managed only a 2.8% increase during the identical period.
The momentum hit a speed bump on Tuesday. CAR shares declined 7.6% in Tuesday’s session following a 24% jump on Monday. The stock reached an intraday peak of $334.39 before retreating.
The rally gained traction in late March when Transportation Security Administration staffing issues stemming from a partial federal government shutdown created extensive security checkpoint delays. As airport bottlenecks intensified, a growing number of travelers chose to drive instead, redirecting demand toward car rental providers.
Both Avis and its competitor Hertz (HTZ) capitalized on this shift. Hertz shares advanced approximately 56% during the past month. On several occasions, CAR and HTZ exhibited correlated movements — during one trading session, Avis rallied over 14% while Hertz posted similar gains as investors anticipated elevated short-term rental activity.
Short Covering Accelerates the Climb
However, the airport disruption narrative only partially accounts for the dramatic price movement. Market analysts and industry watchers identify a significant short squeeze as a primary catalyst.
Short positions in CAR represented more than 26% of available shares as of Tuesday. When stocks with substantial short interest begin climbing, bearish traders are compelled to close their positions to prevent further losses, creating additional buying pressure that propels prices upward.
Deutsche Bank analyst Chris Woronka indicated earlier this month that additional gains from the squeeze could materialize. He connected recent trading patterns to hedge fund Pentwater Capital Management. Pentwater declined to provide commentary when contacted.
This isn’t CAR’s first encounter with squeeze dynamics. In November 2021, the stock exploded 110% in a single trading day following earnings results that suggested strengthening travel demand in the post-pandemic environment.
Analyst Community Remains Skeptical
Notwithstanding the explosive price performance, Wall Street maintains a measured stance on the shares. Deutsche Bank lowered its rating on CAR from Buy to Hold while establishing a $128 price objective. The collective analyst outlook also stands at Hold, with an average price target of $106.43.
Both forecasts sit substantially below the stock’s recent trading range.
The company’s underlying fundamentals offer limited support for current valuation levels. CAR disclosed a Q4 deficit of $4.60 per share, exceeding analyst loss projections. Quarterly revenue declined 2% on a year-over-year basis to $2.66 billion.
Throughout the trailing twelve months, CAR produced approximately $11.65 billion in revenue with an EBITDA margin hovering near 12.7%. However, net profitability remains negative, burdened by a $518 million impairment charge and substantial interest expenses. Long-term debt obligations total around $8.66 billion, while the company’s latest financial statements reveal a net loss of approximately $747 million.
Shares commenced trading near $288 on Monday, April 13, and concluded above $333 — settling near session highs after repeatedly penetrating resistance levels in the $310–$325 zone.
