Avis Budget Group heads into the back half of May with short sellers still committed but the mechanics of that bet becoming steadily cheaper to maintain.
Short interest remains elevated at 14.4% of the float — a genuine bearish anchor — but the direction of travel is clear. Shares short have fallen roughly 42% from their late-April peak of nearly 9.6 million shares, continuing a decompression that began after Pentwater Capital's mass liquidation on April 23. That single episode saw Pentwater dump over $230 million of stock at prices between $264 and $290. The stock now changes hands near $166. The week's move is worth noting: CAR gained 10.2% over the past five sessions, even as short interest edged fractionally higher on the day — up less than half a percent Tuesday. Bears have not capitulated, but they are not pressing harder either.
The borrow market continues to tell a story of relief. Availability has loosened to roughly 72% — well above the near-zero levels that prevailed through most of April, when the entire lending pool was exhausted. Cost to borrow has dropped to just over 1%, down 21% on the week and down more than 75% from the April peak above 8.5%. That is a radically different environment for anyone running a short position today versus six weeks ago. The ORTEX short score of 67.8 remains elevated, ranking in the bottom 6th percentile of the universe, but the trend in that score has been gently easing for two weeks. Options positioning has shifted in the same direction: the put/call ratio of 1.45 is slightly below its 20-day average of 1.53 and well off the 52-week high of 2.85 hit in late April. The defensiveness that defined positioning through the drawdown is fading, though not gone.
The Street remains broadly skeptical, and the analyst activity this month crystallises why. Morgan Stanley kept an Equal-Weight rating on May 20 and nudged its target to $99 — a target that implies roughly 40% downside from current levels. Susquehanna and Barclays both raised targets in early May, to $140 each, but held Neutral and Underweight ratings respectively. JP Morgan, which downgraded to Underweight on April 23 as Pentwater was liquidating, also trimmed its target to $140 after Q1 results. Jefferies downgraded to Hold on May 1. The consensus price target sits at $127, a meaningful discount to where the stock is trading today. The gap between the analyst community's central view and the current price is notable — it suggests the 10% weekly rally has outrun what most sell-side models can justify. The EV/EBITDA multiple at 35.9x has compressed about 2.5 turns over the past month, and the PE of 28.5x has contracted roughly 5 points over the same window, reflecting some valuation relief — but the analyst target discount keeps the fundamental debate live.
Ownership adds another layer to watch. Pentwater still held 2.59 million shares as of April 30, down sharply from its earlier position, making it the third-largest declared holder at just over 7% of shares. SRS Investment Management remains the dominant holder at nearly 49% of the float. The concentration of ownership in a few hands, combined with lingering short interest at 14.4% and a next earnings date of July 31, means the stock's float is genuinely thin. Small changes in either holder category can move the price significantly. Insider activity in late April was exclusively selling — the HR director and an EVP both sold shares at prices above $180, well above current levels.
The setup heading toward the July 31 Q2 report is therefore a study in divergence: the borrow market has normalised, options defensiveness has retreated, and the stock has recovered ground — but the analyst consensus still prices in meaningful downside, short interest at 14% of float remains a live overhang, and Pentwater's residual stake is an unresolved variable. How much of the 10% weekly bounce holds through June is what will determine whether the current positioning reads as stabilisation or a fresh opportunity for bears to re-engage.
See the live data behind this article on ORTEX.
Open CAR on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
