Avis Budget Group reported Q1 results on May 20 and the short-interest picture heading into the print has barely shifted — bears remain dug in at 14.6% of the float, even as the borrow market continues to loosen from April's extreme.
The positioning story is one of gradual decompression rather than a fresh attack. Short interest has drifted slightly lower on the week — down about 1.7% in shares — and is now less than half the level it reached in late April. The dramatic move came in the weeks after Pentwater Capital's mass liquidation on April 23, when Pentwater sold over $230 million of shares at prices between $264 and $290. The stock now trades near $151. Pentwater still held 2.59 million shares as of April 30, so residual overhang remains. The borrow market reflects the easing: availability has risen to 66% — from near-zero in April, when the pool was fully exhausted — and cost to borrow has collapsed to 1.3%, down from a peak above 8.5% on April 22. That is a radically different lending environment, but 14.6% short interest is still a meaningful bearish anchor.
Options traders have turned noticeably less defensive than they were a month ago. The put/call ratio has dropped to 1.42, well below its 20-day average of 1.75 and modestly below one standard deviation of that mean. At the April peak — when the borrow pool was exhausted and shorts were near their high — the PCR hit 2.85, the highest reading of the past year. That unwinding of hedging demand tells the same story as the borrow market: acute stress has passed, but positioning remains cautious.
The Street is heavily skewed bearish. Morgan Stanley this morning maintained Equal-Weight and nudged its target up to $99 — the stock is already 52% above that level. JP Morgan and Barclays both hold Underweight ratings, with targets at $140. Jefferies downgraded to Hold in early May, raising its target to $160 while acknowledging the stock had overshot. The consensus mean target of $127 sits roughly 16% below the current price of $151, meaning the analyst community as a whole is not just cautious but actively pointing to downside. The EV/EBITDA multiple near 35x is difficult to justify given thin operational returns — the quality factor score ranks in the bottom decile of the universe. EPS surprise history (72nd percentile) is one of the few factors working in bulls' favour, suggesting the company has beaten low expectations before.
Earnings reactions at Avis have been reliably punishing. The May 1 print saw the stock fall 6.9% on the day and 19.3% over the following five sessions. The April 29 announcement brought a 0.7% one-day drop that extended to a 9.8% five-day loss. The pattern over the recent history is consistent: the initial day move is modest, but the stock tends to bleed in the days that follow.
Closest peer HTZ — Hertz Global Holdings — had a rough week, falling 14.3% and shedding another 5.2% on Tuesday alone, which provides context for the broader pressures on vehicle rental economics. CAR's relative stability, with a near-flat week, stands out against that backdrop, though it may reflect the post-Pentwater positioning reset rather than any fundamental divergence.
What to watch now is whether the remaining 14.6% short position begins to unwind further after the earnings event clears, or whether fresh shorts re-enter on the analyst community's broadly negative targets — particularly if the five-day drift pattern from prior prints repeats.
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