Key Highlights
- CAR shares jumped 10% to reach $235, propelled by aggressive call option activity and short covering
- The rental car company’s stock has climbed 118% in the past month with only 13.05 million shares in the float
- Hertz (HTZ) climbed 8% to $5.70, riding similar options-driven momentum
- Analysts maintain a “Reduce” consensus rating with an average target price of $115
- The company posted Q4 FY2025 EPS of -$21.25, impacted by a $518M electric vehicle impairment
Avis Budget Group (CAR) delivered another explosive trading session on Tuesday. Shares rocketed from $212.60 to an intraday peak of $235 — representing a 10% surge driven predominantly by derivatives trading and classic short squeeze mechanics.
This represents the most recent development in a spectacular month-long rally that saw CAR appreciate 118% entering Tuesday’s trading. The stock notched a new 52-week high of $214.84 before extending gains even further.
Hertz (HTZ) participated in the upward movement, advancing 8% from $5.31 to $5.70 on comparable call option volume. These two rental car stocks frequently exhibit correlated price action — they operate in the same industry, maintain similar debt-laden balance sheets, and face comparable short interest dynamics.
The CAR trading pattern exhibits classic squeeze characteristics. When substantial call option purchasing impacts a stock with limited liquidity, dealers must hedge their exposure by acquiring shares, driving prices upward and attracting additional traders, creating further hedging requirements. This cycle feeds on itself.
CAR operates with a restricted float of merely 13.05 million shares and total shares outstanding of only 35.26 million. This represents a shallow liquidity pool. When elevated short interest meets forceful call buying in such a constrained name, price movements can become explosive.
The Competing Narratives
The optimistic perspective is straightforward: price momentum, historical squeeze precedents, and conviction that maximum pain lies higher.
The pessimistic view carries more fundamental support. Avis disclosed Q4 FY2025 earnings per share of -$21.25, substantially worse than the -$0.23 consensus estimate. The enterprise maintains $6.1 billion in corporate debt obligations and reports negative shareholders’ equity of -$3.129 billion. A $518 million electric vehicle impairment charge severely impacted quarterly results.
Wall Street’s analytical consensus lands at “Reduce” with a mean price target of $115 — representing less than half of current trading levels. Goldman Sachs maintains an $85 target. Morgan Stanley projects $97. Barclays reduced their target to $95. Deutsche Bank upgraded to Hold with a $128 objective.
This significant gap between market price and analyst projections actually perpetuates the squeeze dynamic. Bearish positions maintaining short exposure means they’ll ultimately need to purchase shares to exit — providing additional upward momentum for long positions.
Ownership Patterns and Institutional Moves
Not all market participants are abandoning the position. Pentwater Capital Management acquired 425,000 shares during February at an average entry price of $94.26 per share, representing a $40 million transaction and expanding their stake by 11.9%.
Insider ownership accounts for 52.8% of the company, while institutional ownership comprises 96.35%.
In a related development, Avis disclosed an at-the-market equity offering program permitting sales of up to 5 million shares — a program that previously triggered a 10% decline when initially announced.
Avis’s 50-day moving average stands at $116.57 and its 200-day moving average registers at $130.71, both significantly below present trading levels.
The stock commands a market capitalization of $7.50 billion and carries a beta of 1.94, illustrating the exceptional volatility characteristic of this security.
