CAR enters its May 20 earnings window in a very different posture than it held three weeks ago — and the speed of the reversal is the story.
Short interest has collapsed. From a peak of roughly 27% of the free float in mid-to-late April, it has fallen to 15.5% as of May 5 — a drop of nearly 22% on the week and 40% over the past month. In raw share terms, that is a move from around 9.6 million shares short to 5.4 million in under six weeks. The pace of covering is not gradual; it is a flush.
The lending market confirms the unwind. Cost to borrow peaked near 8.5% in late April and has since collapsed to just 2.2% — the lowest level in the 30-day window. Availability has opened up substantially in lockstep: the borrow pool was running fully tight through the second and third weeks of April, with zero slack, before easing sharply into May. Availability is now materially looser than at the April peak, though not fully relaxed. The ORTEX short score has followed the same trajectory — it was 75.8 on April 22, and has since eased to 69.1, still elevated but clearly in retreat. The picture is one of forced or opportunistic covering, not a gradual change of thesis.
Options positioning has also rotated. The put/call ratio was 2.85 on April 23 — the highest reading of the past year — and has since eased to 1.64, now below its 20-day average of 1.93. That is a meaningful shift: the heaviest demand for downside protection has come off, though the PCR remains structurally elevated relative to the broader market. The z-score of -0.76 means the put/call is running about three-quarters of a standard deviation below its recent average, suggesting the worst of the defensive hedging has passed.
The catalyst for mid-April's pressure appears to have been institutional. Pentwater Capital Management, then the second-largest holder with nearly 10% of shares outstanding, sold approximately 1 million shares across several transactions on April 23 — at prices in the $250–$290 range. That came as JP Morgan's Ryan Brinkman and Barclays' Dan Levy both downgraded the stock that same week, each raising their targets while cutting their ratings to Underweight — an unusual combination that signalled the stock had run beyond their comfort zone. The stock has since pulled back sharply: CAR closed at $160.10 on May 5, down 12% on the week and 16% over the past month, giving back much of whatever premium prompted those downgrades.
The Street is now broadly cautious. Jefferies downgraded to Hold on May 1, even while raising its target to $160 from $112 — effectively catching up to the price on the way down. JP Morgan and Barclays both trimmed their targets further this week, to $140 apiece. The consensus mean price target is $121.71, which is roughly 24% below the current price. That gap is wide and the direction of travel is unambiguously lower on the analyst side. The PE multiple has compressed 19 points over 30 days, now running at 27x. EV/EBITDA has eased to 36x. At 15.5% short as a proportion of the free float and with a FINRA-reported 7.77 million shares short as of the April 15 settlement date, this is still a heavily shorted stock by any standard — the utilization-equivalent factor rank puts it in the 5th percentile of the universe.
Pentwater remains in the top-holder list despite its selling, now with just under 10% of shares. Its most recent 13G filing as of April 23 still shows 3.49 million shares held — suggesting it retained a significant position even after the large sales. That is worth watching: further trimming from a holder of that scale, into a still-elevated short position and below-target price, would add pressure. The close peer to watch on the other side is HTZ, up nearly 6% on the week while CAR fell 12% — the divergence between the two rental-car names is as wide as it has been in months, and whether CAR converges toward HTZ or continues to underperform into earnings on May 20 is the next significant marker.
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