Avis Budget Group (CAR) has emerged as one of 2024’s most remarkable market stories. Over approximately one month, shares rocketed from roughly $100.44 to $333.40 — representing an extraordinary gain exceeding 264%. By comparison, the S&P 500 advanced a mere 2.8% during the identical timeframe.
The momentum hit a speed bump on Tuesday. CAR shares retreated 7.6% during Tuesday’s session after posting a 24% surge on Monday. The stock briefly touched $334.39 before sellers stepped in.
The rally first gained traction in late March when TSA staffing challenges triggered by a partial government shutdown created extensive security line delays at airports nationwide. Faced with mounting travel headaches, numerous travelers chose to drive instead, redirecting business toward car rental providers.
Both Avis and competitor Hertz (HTZ) capitalized on the shift. Hertz shares climbed approximately 56% during the same one-month period. The two stocks frequently moved in tandem — during one trading session, Avis rallied over 14% alongside Hertz as the market anticipated elevated near-term rental demand.
However, airport chaos tells only part of the story. Market analysts and observers identify a substantial short squeeze as the primary catalyst.
Short interest in CAR exceeded 26% of the publicly available float as of Tuesday. When stocks with heavy short positions begin rising, short-sellers must purchase shares to close positions and limit mounting losses, which creates additional upward price pressure.
Deutsche Bank analyst Chris Woronka suggested earlier this month that the squeeze could have further room to run. He connected recent trading patterns to hedge fund Pentwater Capital Management. Pentwater declined to comment when contacted.
This isn’t CAR’s first encounter with squeeze dynamics. Back in November 2021, the stock exploded 110% in a single trading session following earnings results that suggested a robust post-pandemic recovery in travel activity.
Despite the spectacular price performance, Wall Street analysts maintain a skeptical stance. Deutsche Bank recently downgraded CAR from Buy to Hold while establishing a $128 price target. The broader Street consensus also stands at Hold, with a mean price objective of $106.43.
Both targets represent significant discounts to recent trading levels.
The company’s underlying fundamentals offer little support for current valuations. CAR delivered a Q4 loss of $4.60 per share, missing analyst projections. Quarterly revenue declined 2% year-over-year to $2.66 billion.
For the full year, CAR generated approximately $11.65 billion in revenue with an EBITDA margin hovering around 12.7%. However, net margins remain in negative territory, burdened by a $518 million impairment charge and substantial interest expenses. Long-term debt stands near $8.66 billion, while the company’s latest quarterly results revealed a net loss approaching $747 million.
The stock began trading Monday, April 13 near $288 and closed above $333 — finishing near session highs after repeatedly penetrating resistance levels in the $310–$325 zone.
The post Avis Budget (CAR) Stock Soars 264% in Just One Month — What’s Behind the Rally? appeared first on Blockonomi.
