CAR Records Worst Day Since 2006 As ‘Most Structurally Violent Short Squeeze Since GameStop’ Unravels

• Fugazi Research said the violent two-session unwind occurred when a “prisoners’ dilemma” created by two hedge funds unraveled.
• SRS Investment Management and Pentwater Capital Management had independently built combined economic exposure exceeding 100% of the company’s roughly 35.3 million shares outstanding, effectively holding the public float “hostage” and inflating the stock to roughly six times its fundamental value.
• Earlier on Thursday, JPMorgan analyst Ryan Brinkman downgraded Avis Budget while noting that the shares are trading at an "unsustainable valuation" that is not supported by the company's fundamentals.

Shares of Avis Budget Group (CAR) suffered their worst trading day in nearly two decades on Thursday after a Fugazi Research report exposed the collapse of an artificial short squeeze and laid bare the company’s deep financial distress.

The stock plunged roughly 38% on Wednesday — from a 52-week high near $847 to a close around $444 — and continued selling heavily on Thursday to close 48% lower.  

Fugazi Research said the violent two-session unwind occurred when a “prisoners’ dilemma” created by two hedge funds unraveled. SRS Investment Management and Pentwater Capital Management had independently built combined economic exposure exceeding 100% of the company’s roughly 35.3 million shares outstanding, effectively holding the public float “hostage” and inflating the stock to roughly six times its fundamental value. Fugazi called it “the most structurally violent short squeeze since GameStop.”

Fugazi further painted a bleak picture of the underlying business. Avis recorded $2.71 billion in cumulative net losses attributable to shareholders over 2024 and 2025 while generating $11.65 billion in annual revenue. “The company pays no dividends, conducts no meaningful share repurchases, and carries $25.3 billion in total debt against negative stockholders’ equity of $3.1 billion,” the firm alleged. It now generates only about $0.56 in operating earnings for every $1 of interest owed, according to the report.

Fugazi also noted that the company has erased a substantial portion of its retained earnings over the past two years and that Levi & Korsinsky, LLP is investigating Avis for potential securities law violations.

The firm described Avis not as a traditional car-rental operator but as “a debt-financed asset cycle operating at an industrial scale,” warning that retail shareholders at current prices are essentially providing liquidity for a leveraged exit rather than participating in any fundamental recovery.

What Does Wall Street Think?

According to data from Koyfin, three of the eight analysts covering CAR rate it ‘Sell’ or ‘Strong Sell’ while four rate it ‘Hold’ and one rates it a ‘Buy.’  The 12-month average price target on the stock is $120.29, representing a potential downside of about 48%.

Earlier on Thursday, JPMorgan analyst Ryan Brinkman downgraded Avis Budget to Underweight from Neutral with a price target of $165, up from $123. The shares are trading at an "unsustainable valuation" that is not supported by the company's fundamentals, the analyst said.

How Did Retail Traders React?

On Stocktwits, retail sentiment around CAR fell from ‘neutral’ to ‘bearish’ territory over the past 24 hours, while message volume stayed at extremely high levels.

CAR stock has nearly tripled over the past 12 months. 

Read More: Tesla Eyes 20% Production Surge In Europe On Strong EV Momentum

For updates and corrections, email newsroom[at]stocktwits[dot]com.