Money and Markets

Avis’ share price jumped 212% on Elon Musk, strong earnings, and a possible short-squeeze

Business Insider US
Avis.
Jeffrey Greenberg/Universal Images Group via Getty Images
  • The US-listed Avis Budget Group soared as much as 212% on Tuesday as a potential short-squeeze hit the stock.
  • The car rental firm has more than 20% of its share float shorted, according to data from Koyfin.
  • Catalysts helping boost the stock on Tuesday include strong Q3 earnings and a tweet from Elon Musk casting doubt over Tesla's deal with Hertz.

Avis Budget Group soared to record highs on the Nasdaq on Tuesday, jumping as much as 212% as a short-squeeze took over the stock.

The US-listed car rental company has just over 20% of its shares shorted, according to data from Koyfin. With the stock at all-time-highs, that means every short position is underwater. And given Tuesday's market value gain of more than $25 billion, the shorts are already down billions of dollars.

Avis is a popular short with institutional investors that employ a pair-trading strategy, meaning while they're betting against the stock, they're also long shares of Hertz, a competing car rental company. Hertz only has a short interest of 0.5%.

Catalysts boosting Avis stock on Tuesday include strong third-quarter earnings and a tweet from Elon Musk casting doubt over Tesla's deal to provide Hertz with 100,000 electric vehicles.

"I'd like to emphasize that no contract has been signed yet. Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics," Musk tweeted late Monday.

On Tuesday, Hertz told CNBC that Tesla deliveries have already started.

Meanwhile, Avis Rental's third-quarter earnings report showed a near 100% year-over-year jump in revenue as travel rebounds post-pandemic, and adjusted EPS of $10.74, beating analyst estimates by $4.06.

The company added that current utilisation rates means it is well prepared to service an expected surge in demand amid the upcoming holiday travel season.

Shares are on a tear, rising 1,334% year-to-date. Avis stock experienced several volatility halts in Tuesday's trading session.

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