Does The Fall In Avis Budget Stock Change Anything?

Between April 16 and October 13, 2026, shares of Avis Budget (CAR) fell 76.0%. During that same period, the S&P 500 gained 11.5%. This six-month window opened in the middle of a short squeeze. According to a Forbes report on April 20, that squeeze had lifted the stock almost 390% in a month. So how much did that squeeze have to do with what Avis sells and earns?

Avis Budget’s Squeeze Came From Short Sellers

The answer is very little. Instead, the squeeze came from traders who had bet against the stock. Benzinga reported on April 20 that 53.66% of the shares available to trade were held short. Short sellers borrow shares to sell them, hoping to buy them back at a lower price later. When the price rises, many of those traders must buy shares simultaneously to close their bets, and that buying pushes the stock price higher still.

The shares made trading headlines again in June. The WSJ reported on June 23 that Pentwater Capital, accused of fueling excess volatility in the stock, had agreed to pay Avis $650 million to settle a claim over short-swing profits. During a July 29 call, management noted that the settlement still needed court approval and that it expects the money by year-end. Law firms suing Pentwater allege the firm sold 4.3 million shares over two trading days as the stock fell. Both of these events centered on who owned and traded Avis shares, rather than the rental business.

Avis Rented Fewer Cars From April To June

Management stated on July 29 that travel demand in the second quarter of 2026 came in softer than Avis expected. The company finished the quarter with its Americas fleet 5% smaller than a year earlier, even though its original plan had called for growth tied to World Cup travel. Rental days in the Americas fell 2.1%.

Measured against sales, that operational change was small. Revenue in the latest quarter landed 0.9% below the same period a year earlier. Adjusted EBITDA, a profit measure calculating earnings before interest, taxes, and depreciation, grew from a year earlier. Furthermore, management kept its full-year adjusted EBITDA guidance of $850 million to $1 billion. Ultimately, Avis rented fewer cars, yet the company maintained its sales levels and grew that profit.

How Much Debt Does Avis Budget Still Carry?

The company carries far more debt than its total stock market valuation, and the recent share price decline widened that gap. Avis currently holds debt equal to 766.5% of its market value, against 20.1% for the broader S&P 500. The company also lost money over the past twelve months, posting a net loss equal to 5.4% of revenue. For context, the S&P 500 recorded a 13.3% profit margin over the same timeframe.

The pending Pentwater settlement would not change that debt picture significantly. Net debt, representing what Avis owes after subtracting its cash on hand, stands at $28.6 billion. The expected $650 million from Pentwater would equal a little over 2% of that total. Additionally, Avis reported its net corporate leverage, a narrower debt measure than that $28.6 billion figure, was 7.4 times adjusted EBITDA during the July call. That specific ratio remains the key metric to watch when the company releases its next quarterly results.

Does This Mean You Should Act On CAR?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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