Key Takeaways
- Avis Budget (CAR) plunged over 40% Thursday, triggering eight separate trading halts amid extreme price swings.
- Combined losses across two sessions reached more than 57%, erasing gains from a nearly 600% rally since late March.
- Bears generated $2.8 billion in profits on Wednesday alone, recouping losses accumulated over the previous three days.
- JPMorgan issued an Underweight rating on CAR with a $165 target, highlighting overextended valuations.
- Market observers are drawing parallels to the GameStop trading frenzy of 2021.
Avis Budget (CAR) recorded an $889 million net loss in 2025 while managing $25.3 billion in total debt. Despite these fundamentals, shares climbed nearly 600% in recent weeks. The reversal proved equally dramatic.
CAR shares collapsed more than 40% during Thursday’s session. Circuit breakers triggered eight separate trading pauses as volatility spiked. The previous day had already seen a 38% decline, pushing the combined two-day loss beyond 57%.
Shares had climbed from under $100 in late March to reach a record high approaching $850 during early Wednesday trading. The rally stemmed from a short squeeze. The subsequent reversal ranks among the most severe market moves in recent years.
By late Thursday morning, CAR changed hands near $265.
Bears Recover Massive Losses
Bears accumulated substantial losses during the initial rally. Across three days, they faced an estimated $2.7 billion deficit as shares squeezed higher.
Wednesday’s selloff delivered $2.8 billion in gains for short sellers in just one session, based on S3 Partners data. The squeeze dynamics have completely reversed.
Options volume reached extraordinary levels during the peak. Wednesday alone saw over 200,000 contracts change hands. Implied volatility surged to 235%, dramatically exceeding the S&P 500’s roughly 20% reading.
Charles Schwab implemented new margin requirements on April 9. Traders holding concentrated CAR positions now face 100% margin requirements, effectively mandating cash-only transactions.
Analyst Downgrade Highlights Fundamental Concerns
JPMorgan analyst Ryan Brinkman moved CAR from Neutral to Underweight on Thursday. His price target increased to $165 from $123.
While raising 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.”
He recognized that management might leverage the elevated share price for capital market opportunities, though he considered this insufficient justification for maintaining a neutral stance.
Research firm Fugazi highlighted the underlying numbers. Avis produced $11.65 billion in annual revenue during 2025 while recording an $889 million net loss. This followed an $1.8 billion loss in 2024.
Total debt reaches $25.3 billion. Stockholders’ equity stands at negative $3.1 billion. The company produced approximately $0.56 in operating earnings for each $1.00 of interest obligations.
Two institutional players occupy central roles in this narrative. SRS Investment Management accumulated its stake across nine years through debt-funded float engineering, placing its own partners in the CEO and Executive Chairman positions. Pentwater Capital Management transitioned to unhedged long exposure in March 2026 via its Merger Arbitrage Master Fund.
Their combined economic exposure surpassed 100% of CAR’s total float. With merely 36 million shares outstanding and fewer available for active trading, conditions favored an explosive squeeze.
The past two days alone witnessed over 10 million CAR shares traded.
Avis Budget plans to release first quarter 2026 results on April 29 at 7:00 a.m. Eastern, with an investor call scheduled for 8:30 a.m. Eastern.
