Avis Shares Plunge 40% on Equity Offering Fears After Short Squeeze
CAR has more than doubled off its 52-week low of $84.79 on elevated volume (3.4× avg).
Summary
Avis Budget Group's stock has plunged 40% today, following a 38% decline yesterday, as investors anticipate the company will launch an equity offering. This comes after a massive short squeeze that saw the stock surge over fivefold in the past month, reaching a record high of nearly $848. The company previously established an At-The-Market (ATM) equity offering program on March 27 to issue up to 5 million shares, and the market now expects this program to be utilized, especially around the upcoming Q1 earnings release on April 29. A potential offering of 5 million shares represents significant dilution (approximately 14% of outstanding shares) and is driving the sharp sell-off, as it would likely ease the short squeeze and reduce per-share value. Traders will be closely watching the Q1 earnings call for any announcements regarding capital raises.
At the time of this announcement, CAR was trading at $253.01 on NASDAQ in the Trade & Services sector, with a market capitalization of approximately $8.9B. The 52-week trading range was $84.79 to $847.70. This news item was assessed with negative market sentiment and an importance score of 9 out of 10. Source: Dow Jones Newswires.