Shares of Avis Budget Group saw a massive fall on Thursday. The stock dropped over 42 percent in a single day. Trading was halted 8 times due to extreme volatility. This comes after a sharp 38 percent fall the previous day.
The total decline in 2 days now stands above 57 percent. The crash marks a sudden reversal after a huge 600 percent rally since late March.
Short squeeze reversal wipes gains as short sellers make 2.8 billion dollars
The earlier rally was driven by a short squeeze. That momentum has now completely reversed.
Short sellers made strong gains during the fall. They earned 2.8 billion dollars in one day. This helped recover the 2.7 billion dollars they had lost in the previous 3 days.
The sharp swings show how unstable the stock has become. Fast buying turned into aggressive selling within days.
Financial concerns rise as debt hits 25.3 billion dollars and losses continue
Analysts are raising concerns about the company’s financial health.
JPMorgan downgraded the stock to Underweight. The price target was raised to 165 dollars from 123 dollars. But the downgrade shows caution.
Analysts believe the stock price is far above its actual value. Even strong growth assumptions do not justify the rally.
Financial data adds more pressure. The company reported 11.65 billion dollars in revenue. But it posted a net loss of 889 million dollars in 2025. This follows a bigger loss of 1.8 billion dollars in 2024.
Total debt stands at 25.3 billion dollars. Stockholders’ equity is negative at 3.1 billion dollars. The company earns only 0.56 dollars for every 1 dollar of interest. This shows weak ability to cover debt costs.
Institutional bets exceed 100 percent as earnings report set for April 29
Large investors have played a major role in the stock movement.
SRS Investment Management and Pentwater Capital Management built combined exposure of over 100 percent of shares.
These positions added fuel to the rally and the crash.
The company will release its next earnings on April 29. Investors are now watching closely.
The recent crash highlights one clear point. The rally was not supported by strong fundamentals. The correction came fast and hard.