Avis shares soar in meme

© Reuters. FILE PHOTO: Logos of car rental companies Avis and Trading platform mt4 software downloadBudget are seen outside Paris Charles de Gaulle airport in Roissy-en-France during the outbreak of the coronavirus disease (COVID-19) in France May 19, 2020. REUTERS/Charles Platiau/File Photo

By Medha Singh

(Reuters) -Shares of Avis Budget (NASDAQ:CAR) Group Inc more than doubled on Tuesday as retail investors rushed to get a piece of the heavily shorted U.S. car rental company after its quarterly results beat Wall Street estimates.

Avis executives also said the company has been in talks with manufacturers regarding its plans to add more electric vehicles to its fleet going forward.

The stock was last up around 108% at $358 following multiple trading halts for volatility, and is on track for its sharpest single-day percentage climb since 2009. Shares jumped as high as $545.11 earlier in the session.

The steep climb in Avis shares was evocative of the rally in shares of GameStop (NYSE:GME) and other so-called meme stocks earlier in the year, driven in part by retail investors coordinating on Reddit's WallStreetBets and other online forums.

About 21% of Avis Budget's free float shares are shorted, data from S3 Partners showed, increasing its vulnerability to a phenomenon known as a short squeeze, where investors betting against a company are forced to unwind their positions after a rally in the stock price.

Short sellers were hit with $4.29 billion in mark-to-market losses at a surge to $481.50 in Tuesday's session, S3 Partners' managing director of predictive analytics Ihor Dusaniwsky said.

"The short squeeze could force some existing short sellers to close out all or part of their positions in Avis."

At the same time, hedge fund SRS Investment Management stands to make well over $5 billion on the move through long exposure in the company's shares, the FT reported https://www.ft.com/content/d0640487-12f0-4d8a-bc79-160fca121d18.

Shares of rival Hertz jumped about 7%, reversing earlier losses.

Avis was among the top trending stocks with a 608% jump in message volume on investor-focused website stocktwits.com, indicating interest from small-time investors.

Total revenue of Avis surged 96% to $3 billion in the third quarter from a year earlier as higher number of COVID-19 vaccinations encouraged people to get back on the road. Excluding items, the company earned $10.74 per share.

Analysts had expected earnings of $6.52 per share on revenue of $2.71 billion, according to Refinitiv IBES data.

Nearly 24 million shares changed hands, easily making it the company's busiest trading session this year. Avis shares boosted the Dow Jones Transportation Average by 6.2%.

Statement: The content of this article does not represent the views of FTI website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!