Avis Budget Group Faces Downgrade Amid Short Squeeze Potential
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 18 2024
0mins
Should l Buy CAR?
Source: Coinmarketcap
Avis Budget Group Inc (CAR) saw its shares rise by 3.01% as it reached a 20-day high.
However, Deutsche Bank downgraded Avis Budget from Buy to Hold, citing concerns over a potential short squeeze despite positive underlying momentum in the company's core business. Analyst Chris Woronka noted that while the downgrade reflects fundamental concerns, the stock's recent rally of over 30% in the past week indicates investor interest. The downgrade has led to a cautious market reaction, with investors closely monitoring the company's performance in the evolving AV/robo taxi sector.
The implications of this downgrade suggest that while there is confidence in Avis Budget's future potential, the market may react negatively to the downgrade in the short term. Investors will need to assess how the company navigates these challenges while capitalizing on growth opportunities.
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Analyst Views on CAR
Wall Street analysts forecast CAR stock price to fall
1 Analyst Rating
0 Buy
1 Hold
0 Sell
Hold
Current: 255.150
Low
142.00
Averages
142.00
High
142.00
Current: 255.150
Low
142.00
Averages
142.00
High
142.00
About CAR
Avis Budget Group, Inc. is a provider of mobility solutions through its three brands, Avis, Budget and Zipcar, as well as several other brands. Its brands offer a range of options, from car and truck rental to car sharing. Its segments include Americas and International. The Americas segment consists primarily of vehicle rental operations in North America, South America, Central America and the Caribbean and operates car-sharing operations in certain of these markets. The International segment consists of vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, and operates car-sharing operations in certain of these markets. The Avis brand provides vehicle rental and other mobility solutions at price points generally above non-branded and value-branded vehicle rental companies and serves the premium commercial and leisure segments of the travel industry. Its other brands include Payless, Apex, AmicoBlu, Maggiore, Morini Rent, FranceCars, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Avis Budget Group Shares Hit New 52-Week High Amid Short Squeeze
- Stock Surge: Avis Budget Group's stock rose by 15.7% today, reaching a price of $254.78, which marks a 150% increase from its mid-March low and sets a new 52-week high, indicating strong market optimism about its future performance.
- Short Selling Pressure: As of the latest report, 23% of the outstanding shares and 48% of the total float have been sold short, and as the stock continues to rise, short sellers are facing increasing unrealized losses, reflecting heightened market interest and speculative sentiment surrounding the stock.
- Psychological Game: Short sellers are attempting to sway market sentiment by spreading negative news, while proponents of the short squeeze argue that a wave of buying will occur as short sellers close their positions, creating a complex market dynamic that could drive prices higher.
- Investment Risks: Despite the strong short-term stock performance, the uncertainty in the market suggests that investors should proceed with caution, especially considering the disconnect between stock price volatility and the company's fundamentals, leading to a recommendation for investors to remain on the sidelines.
See More
HTZ Stock Rises 10%, Surpasses 200-DMA for the First Time in Over Two Months – Retail Anticipates Additional Growth
Used Vehicle Prices Rise: Wholesale used vehicle prices increased in March, with the Mannheim Used Vehicle Value Index reaching its highest levels since summer 2023, reflecting strong market demand.
Hertz Stock Surge: Shares of Hertz Global Holdings jumped nearly 10%, reclaiming their 200-day moving average for the first time since January 2022, driven by a significant increase in stock volume.
Retail Demand Remains Strong: Retail conditions improved in early 2026, supported by higher tax refunds and robust consumer demand, leading to a 2% year-over-year increase in used vehicle sales.
Market Sentiment: Retail sentiment on stocks has remained "extremely bullish," with significant buzz around Hertz, as the stock has gained around 10% year-to-date.
See More
Deutsche Bank Downgrades CAR Rating to Hold
- Rating Downgrade Impact: Deutsche Bank downgraded CAR's rating from 'Buy' to 'Hold' with a price target of $128, implying nearly 40% downside, reflecting concerns over the company's fundamentals that may lead to decreased investor confidence.
- Surge in Short-Term Sentiment: Despite the downgrade, CAR's market sentiment jumped from 'bullish' to 'extremely bullish' within 24 hours, with message volume spiking 2033.3%, indicating strong investor expectations for a short-term price rebound that could lead to increased volatility.
- Short Squeeze Dynamics: Analysts noted that CAR's price rally is primarily driven by a short squeeze, with disclosures from Pentwater Capital Management revealing bullish positioning through put options written at strike prices of $110 to $150, suggesting further upward price momentum.
- Fundamental Challenges: Despite the stock's rise, Avis Budget reported a fourth-quarter loss significantly wider than analyst expectations, with the CEO acknowledging failure to meet guidance, while the CFO indicated a 'reset' on depreciation in the current quarter, potentially pressuring core earnings.
See More
Major Wall Street Rating Changes on Monday
- Jefferies Upgrades Boot Barn: Jefferies upgraded Boot Barn from hold to buy, citing robust demand and a reset valuation from approximately 24x to 16x, indicating a more attractive investment opportunity in the current market environment.
- KBW Initiates Coverage on Sezzle: KBW initiated coverage on Sezzle with an outperform rating and a 12-month price target of $85, implying a 33% potential upside, reflecting the company's underappreciated profitable growth in the buy-now pay-later sector.
- Morgan Stanley Names Seagate a Top Pick: Morgan Stanley identified Seagate as an
See More
Deutsche Bank Downgrades Avis Budget to Hold Amid Short Squeeze Potential
- Rating Downgrade: Deutsche Bank has downgraded Avis Budget (CAR) from Buy to Hold, with analyst Chris Woronka emphasizing that the downgrade is fundamentally driven, even though technical factors may lead to a potential short squeeze that could elevate the stock price.
- Stock Performance: Following the downgrade, Avis Budget's shares fell 2.6% in premarket trading, indicating a negative market reaction to the rating change and reflecting investor caution regarding future price movements.
- Business Outlook: Despite the downgrade, Woronka believes there is positive underlying momentum in Avis Budget's core business, with strong demand and pricing, and that management is well-positioned to capitalize on opportunities in the evolving AV/robo taxi sector.
- Short-term Strategy: Given the stock's over 30% rally in the past week, Deutsche Bank has opted to remain on the sidelines in the near term, although analysts stress that this is not a sell signal, indicating ongoing confidence in the company's future potential.
See More
Avis Budget Group Stock Surges 28% After Analyst Upgrade
- Stock Recovery: Avis Budget Group's stock rebounded significantly, ending the week 28% higher after a notable drop on Monday, indicating a marked improvement in investor sentiment and renewed confidence in the company's future performance.
- Analyst Upgrade: Jefferies analyst John Colantuoni upgraded Avis's rating to 'buy', based on an analysis of recent developments in artificial intelligence, suggesting a positive outlook for the company amidst evolving market dynamics.
- Market Dynamics Impact: Despite benefiting from chaos at U.S. airports, analysts warn that surging oil prices are driving up gas prices, which may deter consumers from renting cars, particularly as Avis's fleet consists largely of traditional gas-powered vehicles, posing a significant challenge.
- Changing Competitive Landscape: Colantuoni believes that companies like Avis and Instacart will benefit directly from advancements in AI rather than compete against it, presenting new growth opportunities for Avis, even as it navigates external economic pressures.
See More
Avis Budget Group Shares Hit New 52-Week High Amid Short Squeeze
- Stock Surge: Avis Budget Group's stock rose by 15.7% today, reaching a price of $254.78, which marks a 150% increase from its mid-March low and sets a new 52-week high, indicating strong market optimism about its future performance.
- Short Selling Pressure: As of the latest report, 23% of the outstanding shares and 48% of the total float have been sold short, and as the stock continues to rise, short sellers are facing increasing unrealized losses, reflecting heightened market interest and speculative sentiment surrounding the stock.
- Psychological Game: Short sellers are attempting to sway market sentiment by spreading negative news, while proponents of the short squeeze argue that a wave of buying will occur as short sellers close their positions, creating a complex market dynamic that could drive prices higher.
- Investment Risks: Despite the strong short-term stock performance, the uncertainty in the market suggests that investors should proceed with caution, especially considering the disconnect between stock price volatility and the company's fundamentals, leading to a recommendation for investors to remain on the sidelines.
See More
HTZ Stock Rises 10%, Surpasses 200-DMA for the First Time in Over Two Months – Retail Anticipates Additional Growth
Used Vehicle Prices Rise: Wholesale used vehicle prices increased in March, with the Mannheim Used Vehicle Value Index reaching its highest levels since summer 2023, reflecting strong market demand.
Hertz Stock Surge: Shares of Hertz Global Holdings jumped nearly 10%, reclaiming their 200-day moving average for the first time since January 2022, driven by a significant increase in stock volume.
Retail Demand Remains Strong: Retail conditions improved in early 2026, supported by higher tax refunds and robust consumer demand, leading to a 2% year-over-year increase in used vehicle sales.
Market Sentiment: Retail sentiment on stocks has remained "extremely bullish," with significant buzz around Hertz, as the stock has gained around 10% year-to-date.
See More
Deutsche Bank Downgrades CAR Rating to Hold
- Rating Downgrade Impact: Deutsche Bank downgraded CAR's rating from 'Buy' to 'Hold' with a price target of $128, implying nearly 40% downside, reflecting concerns over the company's fundamentals that may lead to decreased investor confidence.
- Surge in Short-Term Sentiment: Despite the downgrade, CAR's market sentiment jumped from 'bullish' to 'extremely bullish' within 24 hours, with message volume spiking 2033.3%, indicating strong investor expectations for a short-term price rebound that could lead to increased volatility.
- Short Squeeze Dynamics: Analysts noted that CAR's price rally is primarily driven by a short squeeze, with disclosures from Pentwater Capital Management revealing bullish positioning through put options written at strike prices of $110 to $150, suggesting further upward price momentum.
- Fundamental Challenges: Despite the stock's rise, Avis Budget reported a fourth-quarter loss significantly wider than analyst expectations, with the CEO acknowledging failure to meet guidance, while the CFO indicated a 'reset' on depreciation in the current quarter, potentially pressuring core earnings.
See More
Major Wall Street Rating Changes on Monday
- Jefferies Upgrades Boot Barn: Jefferies upgraded Boot Barn from hold to buy, citing robust demand and a reset valuation from approximately 24x to 16x, indicating a more attractive investment opportunity in the current market environment.
- KBW Initiates Coverage on Sezzle: KBW initiated coverage on Sezzle with an outperform rating and a 12-month price target of $85, implying a 33% potential upside, reflecting the company's underappreciated profitable growth in the buy-now pay-later sector.
- Morgan Stanley Names Seagate a Top Pick: Morgan Stanley identified Seagate as an
See More
Deutsche Bank Downgrades Avis Budget to Hold Amid Short Squeeze Potential
- Rating Downgrade: Deutsche Bank has downgraded Avis Budget (CAR) from Buy to Hold, with analyst Chris Woronka emphasizing that the downgrade is fundamentally driven, even though technical factors may lead to a potential short squeeze that could elevate the stock price.
- Stock Performance: Following the downgrade, Avis Budget's shares fell 2.6% in premarket trading, indicating a negative market reaction to the rating change and reflecting investor caution regarding future price movements.
- Business Outlook: Despite the downgrade, Woronka believes there is positive underlying momentum in Avis Budget's core business, with strong demand and pricing, and that management is well-positioned to capitalize on opportunities in the evolving AV/robo taxi sector.
- Short-term Strategy: Given the stock's over 30% rally in the past week, Deutsche Bank has opted to remain on the sidelines in the near term, although analysts stress that this is not a sell signal, indicating ongoing confidence in the company's future potential.
See More
Avis Budget Group Stock Surges 28% After Analyst Upgrade
- Stock Recovery: Avis Budget Group's stock rebounded significantly, ending the week 28% higher after a notable drop on Monday, indicating a marked improvement in investor sentiment and renewed confidence in the company's future performance.
- Analyst Upgrade: Jefferies analyst John Colantuoni upgraded Avis's rating to 'buy', based on an analysis of recent developments in artificial intelligence, suggesting a positive outlook for the company amidst evolving market dynamics.
- Market Dynamics Impact: Despite benefiting from chaos at U.S. airports, analysts warn that surging oil prices are driving up gas prices, which may deter consumers from renting cars, particularly as Avis's fleet consists largely of traditional gas-powered vehicles, posing a significant challenge.
- Changing Competitive Landscape: Colantuoni believes that companies like Avis and Instacart will benefit directly from advancements in AI rather than compete against it, presenting new growth opportunities for Avis, even as it navigates external economic pressures.
See More
