Avis Budget Shares Plunge After Meteoric Rise Sparks Meme-Stock Comparisons

Shares of Avis Budget Group (CAR) suffered a severe correction on Wednesday, closing down 38% after hitting an intraday record high of approximately $850. The stock continued its decline in Thursday's premarket trading, falling an additional 6% to trade around $417 per share. The volatility follows a massive rally that saw the stock climb from under $100 just last month. This rapid ascent and subsequent collapse have drawn comparisons to the GameStop phenomenon, characterized by extreme price swings and speculative trading patterns. Trading activity has been intense, with over 10 million shares changing hands in just two days. Options markets reflected the chaos, with over 200,000 contracts traded on Wednesday and implied volatility soaring to 235%, vastly exceeding the S&P 500's 20%. The limited float has exacerbated the swings, as Pentwater Capital Management and SRS Investment Management control a significant portion of the 36 million outstanding shares. In response to the instability, brokers including Charles Schwab have adjusted margin requirements, now requiring 100% margin for traders with concentrated positions in CAR. This shift to cash-only trading for concentrated holders likely accelerated the sell-off as leveraged positions were forced to liquidate, mirroring the restrictions seen during previous retail-driven trading frenzies.