CAR - Avis Budget Group Stock Crashed 34% Last Week

2024-02-21 10:38:49 ET

Summary

• Avis Budget stock price plunged last week and early this week.
• The car rental company is being negatively impacted by continued high interest rates and weak used vehicle prices.
• Their massive stock repurchase program has negatively impacted their balance sheet and the company remains very highly leveraged.
• TSA daily airport screenings continue to increase.

Avis Budget Group ( CAR ) stock price crashed last week not so much because of car rental demand issues, but mostly because of serious problems with their operating model. Higher interest rates and lower used vehicle prices are having a significant negative impact on their financials. Since interest rates may stay higher for longer, these problems are not going away any time soon. While TSA screening numbers continue their upward trend, which should help Avis, I think the most important variable is interest rates when valuing CAR stock....

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