Tuesday saw a lot of big news announcements that moved the markets. Among others, President Biden promised that America could continue to curb greenhouse emissions in a global conference, with other global leaders making similar commitments recently. For this reason, it’s no surprise that electric vehicle stocks have done well this week. While not necessarily an EV stock, per se, Avis Budget (NASDAQ: CAR) skyrocketed after announcing it would be drastically increasing its fleet of electric cars for rent.
The car rental giant actually made a couple of major announcements. The first had to do with its Q3 earnings results, which were well above most analyst estimates. Revenues came in at $3 billion, a 96.1% increase from last year as well as $220 million higher than Wall Street’s targets. Net income was up as well for the quarter. Earnings-per-share came in at $10.45, over 50% higher than the initial target for Q3.
It’s a stark contrast from last year, where Avis had filed for bankruptcy protection. Car rental companies were expected to go out of business during the heights of the pandemic. Nowadays, however, it seems most have emerged largely unscathed from 2020.
“We are seeing the benefits of initiatives we began during the early days of the pandemic and look to build on this positive momentum as the travel environment continues to normalize,” said CEO Joe Ferraro.
Overall, the results were already excellent. However, what further helped propel Avis was news regarding its EV collection. The company said it would be adding an undetermined number of new electric vehicles to its rental fleet. We’ve already seen Hertz (OTC: HTZZ) announce it would be buying over 100,000 Tesla’s in the coming years, which helped Hertz’ stock price earlier this month. It’s no doubt that similar news coming from Avis played a role in Tuesday’s surge.
The lingering bearishness from the pandemic period also played a role in Avis’s stock price jump. Around 20% of existing shares were shorted prior to Tuesday. While that’s not as high as some meme stocks like GameStop, it’s still enough to garner attention from traders on WallStreetBets looking for the next short squeeze candidate. Strong Q3 results, the EV announcement, as well as the possibility for a short squeeze in the making were all reasons why Avis more than doubled.
Trading had to be stopped multiple times over the course of Tuesday, with shares settling at a 108% gain. Since the year began, Avis has returned a staggering 907.8%, making it one of the best performing large-cap stocks on the Nasdaq.
Avis Budget Company Profile
Avis Budget Group Inc is a provider of automotive vehicle rental and car-sharing services. Its brands include Avis, Budget, and Zipcar. Avis is targeted to serve the premium commercial and leisure segments of the travel industry, while Budget is focused on value-conscious customers. The company operates its own network of rental locations and licenses its brands to franchisees. Zipcar is a car-sharing service that allows members to use the company-owned Zipcar fleet at an hourly rate. The company’s largest region by revenue is the Americas. – Warrior Trading News