Avis Budget Stock Plummets 50% Amid Trading Turmoil
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Source: seekingalpha
- Stock Plunge: Avis Budget Group (CAR) saw its stock plummet 50% in Thursday afternoon trading, extending a downward trend that began on Wednesday, indicating extreme market pessimism as the stock has now fallen over 75% from its meme-fueled high.
- Trading Mechanics Impact: The unique trading situation was exacerbated by aggressive call buying, with Barclays noting that two holders accounted for 71% of Avis Budget's (CAR) outright ownership and over 100% of economic interest, creating significant market instability.
- Rating Downgrade: Deutsche Bank downgraded Avis Budget (CAR) to a Hold rating earlier this week due to valuation concerns, while Hertz Global Holdings (HTZ) has already lost its last bullish analyst, reflecting a broader cautious sentiment towards the car rental sector.
- Surge in Trading Volume: Despite a thin float, trading volume for both Avis Budget (CAR) and Hertz Global (HTZ) has surged over the past week, indicating heightened investor interest that may lead to further price volatility.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy CAR?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on CAR
Wall Street analysts forecast CAR stock price to fall
1 Analyst Rating
0 Buy
1 Hold
0 Sell
Hold
Current: 182.005
Low
142.00
Averages
142.00
High
142.00
Current: 182.005
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 CEO Claims Shares Are Undervalued Amid High Short Interest
- Undervalued Stock: Avis Budget CEO Brian Choi stated during the latest earnings call that the stock is undervalued and ruled out issuing new shares at current levels, which bolstered investor confidence despite short interest reaching 25.6%, the highest in nearly six years.
- Guidance Upgrade: The company raised its full-year adjusted EBITDA guidance to a range of $850 million to $1 billion after exceeding its internal plan by $50 million, indicating significant operational improvement amid strong rental demand, even though Q1 reported a loss per share of $8.01, wider than expected.
- Investor Sentiment Fluctuation: Recent trading activity from Pentwater Capital, which sold about 4.3 million shares, has drawn market attention and led to a steep decline in stock price; Choi emphasized the company's commitment to reviewing these transactions closely and aggressively pursuing shareholder rights where appropriate.
- Retail Trader Sentiment: On Stocktwits, retail sentiment for CAR is deemed 'extremely bearish' with a 122% surge in message volume over 24 hours, reflecting market concerns about the company's future performance, despite a 97% increase in stock price over the past year.
See More
Mixed US Stock Performance Amid Soaring Oil Prices
- Oil Price Surge Impacts Market: WTI crude oil prices rose over 5% to a two-week high as the US maintains its naval blockade of Iran, leading to increased inflation expectations that negatively affect the stock market.
- Strong Tech Stock Performance: The Nasdaq 100 index increased by 0.09%, primarily driven by strong earnings from NXP Semiconductors and Seagate Technology, both up over 14%, indicating robust demand for AI infrastructure.
- Housing Data Exceeds Expectations: US March housing starts unexpectedly rose by 10.8% to 1.502 million, significantly surpassing the market expectation of 1.380 million, demonstrating resilience in the construction sector that may support the stock market.
- Fed Policy Remains Unchanged: The Federal Reserve decided to keep monetary policy unchanged at the FOMC meeting despite a record number of dissenting votes, with markets anticipating future policy will continue to focus on oil prices and inflation dynamics.
See More
Mixed US Stock Market as Soaring Oil Prices Impact Sentiment
- Oil Price Surge Affects Market: WTI crude oil prices have surged over 4% due to the US maintaining its naval blockade of Iran, reaching a two-week high, which has raised inflation expectations and negatively impacted the stock market.
- Strong Performance in Tech Stocks: The Nasdaq 100 index is up 0.20%, primarily driven by NXP Semiconductors and Seagate Technology, both rising over 10% after reporting stronger-than-expected earnings, indicating robust demand for AI infrastructure.
- Housing Data Exceeds Expectations: US March housing starts unexpectedly rose by 10.8% to 1.502 million, significantly surpassing the expected decline to 1.380 million, demonstrating resilience in the construction sector that may support the stock market.
- Stable Fed Policy Expectations: The market anticipates that the Fed will keep interest rates unchanged at the upcoming meeting, as further developments in oil prices and inflation are still under observation, reflecting a cautious approach to future economic policy.
See More
Mixed US Stock Market as Oil Prices Surge
- Mixed Market Performance: The S&P 500 Index fell by 0.04%, the Dow Jones Industrial Average dropped by 0.49%, while the Nasdaq 100 Index rose by 0.48%, indicating varied market reactions, particularly with technology stocks climbing due to strong demand.
- Oil Price Surge: WTI crude oil prices increased by over 5% to a two-week high as the US maintains its naval blockade of Iran, raising inflation expectations and negatively impacting stocks, potentially exacerbating the global energy crisis.
- Strong Housing Data: US March housing starts unexpectedly rose by 10.8% to 1.502 million, surpassing expectations, indicating resilience in the real estate market and potentially providing support for stocks.
- Tech Earnings Anticipation: With earnings reports from Alphabet, Amazon, Microsoft, and Meta Platforms on the horizon, market expectations are high for technology stocks, as 80% of S&P 500 companies have already exceeded earnings estimates, projecting a 12% year-over-year increase in Q1 earnings.
See More
Avis Budget Reports Second Consecutive Quarterly Loss Amid Investor Stake Reduction
- Consecutive Losses: Avis Budget's stock is on track for a sixth straight decline after reporting a second consecutive quarterly loss, with Q1 losses narrowing to $8.01 per share from $14.35 a year ago, indicating ongoing profitability challenges for the company.
- Investor Stake Reduction: Major investor Pentwater Capital Management offloaded approximately 3.44 million shares between April 22 and 23, putting additional pressure on the stock price and reflecting market concerns about the company's future prospects, which may undermine investor confidence.
- High Operating Costs: Despite a 4% year-over-year revenue increase to $2.53 billion in Q1, surpassing analyst expectations, Avis faces significant profitability pressures due to high operating costs, rising interest expenses, and vehicle depreciation, highlighting challenges faced by the industry as a whole.
- Short-Term Pressure: The short interest in Avis stock stands at around 69%, down from 94.2% last week, yet the stock still fell 7% to $169.2, reflecting market uncertainty regarding the company's future performance and potentially leading to further stock price volatility.
See More
Avis Budget Reports Larger-Than-Expected Q1 Loss
- Financial Underperformance: Avis Budget's Q1 revenue increased by 4.3% year-over-year to $2.53 billion; however, the adjusted EBITDA remained at -$113 million, indicating significant challenges in profitability.
- Earnings Miss: The GAAP EPS of -$8.01 fell short of market expectations by $0.51, which could negatively impact investor confidence moving forward.
- Liquidity Improvement: Despite the losses, the company's liquidity position reached $915 million at the end of the quarter, with an additional $2.9 billion in fleet funding capacity, demonstrating some financial flexibility.
- Market Reaction: Following the disappointing earnings report, Avis Budget's stock dropped 17% in premarket trading, falling over 70% from its recent high, reflecting market concerns about its future performance.
See More
Avis Budget CEO Claims Shares Are Undervalued Amid High Short Interest
- Undervalued Stock: Avis Budget CEO Brian Choi stated during the latest earnings call that the stock is undervalued and ruled out issuing new shares at current levels, which bolstered investor confidence despite short interest reaching 25.6%, the highest in nearly six years.
- Guidance Upgrade: The company raised its full-year adjusted EBITDA guidance to a range of $850 million to $1 billion after exceeding its internal plan by $50 million, indicating significant operational improvement amid strong rental demand, even though Q1 reported a loss per share of $8.01, wider than expected.
- Investor Sentiment Fluctuation: Recent trading activity from Pentwater Capital, which sold about 4.3 million shares, has drawn market attention and led to a steep decline in stock price; Choi emphasized the company's commitment to reviewing these transactions closely and aggressively pursuing shareholder rights where appropriate.
- Retail Trader Sentiment: On Stocktwits, retail sentiment for CAR is deemed 'extremely bearish' with a 122% surge in message volume over 24 hours, reflecting market concerns about the company's future performance, despite a 97% increase in stock price over the past year.
See More
Mixed US Stock Performance Amid Soaring Oil Prices
- Oil Price Surge Impacts Market: WTI crude oil prices rose over 5% to a two-week high as the US maintains its naval blockade of Iran, leading to increased inflation expectations that negatively affect the stock market.
- Strong Tech Stock Performance: The Nasdaq 100 index increased by 0.09%, primarily driven by strong earnings from NXP Semiconductors and Seagate Technology, both up over 14%, indicating robust demand for AI infrastructure.
- Housing Data Exceeds Expectations: US March housing starts unexpectedly rose by 10.8% to 1.502 million, significantly surpassing the market expectation of 1.380 million, demonstrating resilience in the construction sector that may support the stock market.
- Fed Policy Remains Unchanged: The Federal Reserve decided to keep monetary policy unchanged at the FOMC meeting despite a record number of dissenting votes, with markets anticipating future policy will continue to focus on oil prices and inflation dynamics.
See More
Mixed US Stock Market as Soaring Oil Prices Impact Sentiment
- Oil Price Surge Affects Market: WTI crude oil prices have surged over 4% due to the US maintaining its naval blockade of Iran, reaching a two-week high, which has raised inflation expectations and negatively impacted the stock market.
- Strong Performance in Tech Stocks: The Nasdaq 100 index is up 0.20%, primarily driven by NXP Semiconductors and Seagate Technology, both rising over 10% after reporting stronger-than-expected earnings, indicating robust demand for AI infrastructure.
- Housing Data Exceeds Expectations: US March housing starts unexpectedly rose by 10.8% to 1.502 million, significantly surpassing the expected decline to 1.380 million, demonstrating resilience in the construction sector that may support the stock market.
- Stable Fed Policy Expectations: The market anticipates that the Fed will keep interest rates unchanged at the upcoming meeting, as further developments in oil prices and inflation are still under observation, reflecting a cautious approach to future economic policy.
See More
Mixed US Stock Market as Oil Prices Surge
- Mixed Market Performance: The S&P 500 Index fell by 0.04%, the Dow Jones Industrial Average dropped by 0.49%, while the Nasdaq 100 Index rose by 0.48%, indicating varied market reactions, particularly with technology stocks climbing due to strong demand.
- Oil Price Surge: WTI crude oil prices increased by over 5% to a two-week high as the US maintains its naval blockade of Iran, raising inflation expectations and negatively impacting stocks, potentially exacerbating the global energy crisis.
- Strong Housing Data: US March housing starts unexpectedly rose by 10.8% to 1.502 million, surpassing expectations, indicating resilience in the real estate market and potentially providing support for stocks.
- Tech Earnings Anticipation: With earnings reports from Alphabet, Amazon, Microsoft, and Meta Platforms on the horizon, market expectations are high for technology stocks, as 80% of S&P 500 companies have already exceeded earnings estimates, projecting a 12% year-over-year increase in Q1 earnings.
See More
Avis Budget Reports Second Consecutive Quarterly Loss Amid Investor Stake Reduction
- Consecutive Losses: Avis Budget's stock is on track for a sixth straight decline after reporting a second consecutive quarterly loss, with Q1 losses narrowing to $8.01 per share from $14.35 a year ago, indicating ongoing profitability challenges for the company.
- Investor Stake Reduction: Major investor Pentwater Capital Management offloaded approximately 3.44 million shares between April 22 and 23, putting additional pressure on the stock price and reflecting market concerns about the company's future prospects, which may undermine investor confidence.
- High Operating Costs: Despite a 4% year-over-year revenue increase to $2.53 billion in Q1, surpassing analyst expectations, Avis faces significant profitability pressures due to high operating costs, rising interest expenses, and vehicle depreciation, highlighting challenges faced by the industry as a whole.
- Short-Term Pressure: The short interest in Avis stock stands at around 69%, down from 94.2% last week, yet the stock still fell 7% to $169.2, reflecting market uncertainty regarding the company's future performance and potentially leading to further stock price volatility.
See More
Avis Budget Reports Larger-Than-Expected Q1 Loss
- Financial Underperformance: Avis Budget's Q1 revenue increased by 4.3% year-over-year to $2.53 billion; however, the adjusted EBITDA remained at -$113 million, indicating significant challenges in profitability.
- Earnings Miss: The GAAP EPS of -$8.01 fell short of market expectations by $0.51, which could negatively impact investor confidence moving forward.
- Liquidity Improvement: Despite the losses, the company's liquidity position reached $915 million at the end of the quarter, with an additional $2.9 billion in fleet funding capacity, demonstrating some financial flexibility.
- Market Reaction: Following the disappointing earnings report, Avis Budget's stock dropped 17% in premarket trading, falling over 70% from its recent high, reflecting market concerns about its future performance.
See More
