What Happened?
Shares of car rental services provider Avis (NASDAQ:CAR) fell 14.9% in the afternoon session after the company reported disappointing second-quarter financial results that fell significantly short of analyst expectations. The car rental company’s earnings per share (EPS) came in at just $0.10, a staggering 95% below the consensus estimate of $2.02 and a 75.6% drop from the prior-year quarter. Total revenue also disappointed, decreasing by 0.3% year-over-year to $3.04 billion, which missed Wall Street's forecast of $3.07 billion. The company’s net income also declined sharply, falling 66.7% to $5 million. The substantial miss on profitability and the slight revenue decline prompted a strong negative reaction from investors.
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What Is The Market Telling Us
Avis Budget Group’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. But moves this big are rare even for Avis Budget Group and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 21.1% on the news that shares of car rental companies rose as the 25% tariffs announced by President Trump on all vehicles imported into the US suggested new vehicles might be more expensive.
The thinking on the Street is pretty straightforward: if new cars get more expensive, consumers might hold off on buying. That puts rental and car-sharing companies in a good spot. If buying a new car suddenly feels more expensive, people might start looking for cheaper, more flexible options. Renting for a weekend trip, or even month-to-month deals, start to make a lot more sense. So investors are getting ahead of that curve. They're betting demand for these services picks up, which means better fleet utilization, stronger revenues, and possibly fatter margins for the big rental players.
Avis Budget Group is up 119% since the beginning of the year, but at $176.26 per share, it is still trading 15.1% below its 52-week high of $207.55 from July 2025. Investors who bought $1,000 worth of Avis Budget Group’s shares 5 years ago would now be looking at an investment worth $6,641.
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