Why Avis Budget Group Stock Drove Higher This Week
Key Points
The rental car business is having its moment in the sun.
Catalysts for volatility remain for Avis Budget stock.
- 10 stocks we like better than Avis Budget Group ›
Shares of rental car company Avis Budget Group (NASDAQ: CAR) soared this week. After nearly moving 50% above last Friday's close, the stock remained about 38% higher for the week as of mid-day Friday trading, according to data provided by S&P Global Market Intelligence.
Airport chaos is making headlines, and statistics show that long lines at some airport security checkpoints are sending consumers to the rental car counter.
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Keep your eye on retail traders
As the partial government shutdown continues to affect domestic airports, more travelers are considering renting cars. Avis Budget peer Hertz Global is seeing an approximately 15% surge in web traffic, according to reports. That implies that travelers are either avoiding flying to bypass airport congestion or making backup plans in case of missed flights during the spring travel season.
Risks remain high for Avis Budget stock in both directions. Retail traders made the stock a meme stock in 2021, driving it to over $350 per share. As of mid-march, 23.5% of the float was still sold short, according to MarketWatch. That could trigger a short squeeze, pushing the stock sharply higher in a short period. On the other hand, travel and tourism stocks could be hit hard by an economic downturn or global unrest.
Investors who may want to take a more passive approach should likely avoid this name. There are catalysts for more volatility ahead for Avis Budget Group.
Should you buy stock in Avis Budget Group right now?
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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