Key TakeawaysAvis Budget (CAR) plunged more than 40% on Thursday, triggering eight separate trading halts amid extreme volatility.Combined losses over two sessions exceeded 57%, erasing gains from a nearly 600% rally that began in late March.Bears netted $2.8 billion in a single day Wednesday, offsetting three days of prior losses.JPMorgan slashed its rating to Underweight while setting a $165 target, warning fundamentals don’t support current levels.The dramatic price action has sparked parallels to the 2021 GameStop trading frenzy.Despite reporting an $889 million net loss in 2025 and shouldering $25.3 billion in total liabilities, Avis Budget (CAR) still managed to skyrocket nearly 600% in a matter of weeks. The reversal has proven equally ferocious.Avis Budget Group, Inc., CARShares tumbled more than 40% during Thursday’s session. Exchange officials paused trading eight separate times as circuit breakers kicked in. This followed Wednesday’s 38% decline, pushing the combined two-day retreat past 57%.The rental car giant’s shares had climbed from below $100 in late March to a peak approaching $850 during early Wednesday trading. The explosive move was fueled by a short squeeze. The subsequent unwinding ranks among the most dramatic reversals witnessed in recent market history.By Thursday late morning, CAR shares were changing hands near $265.Bears Recoup Massive LossesShort sellers endured substantial pain during the stock’s ascent. Estimates indicate they absorbed roughly $2.7 billion in mark-to-market losses across three days as the squeeze intensified.Wednesday’s reversal delivered swift justice, generating $2.8 billion in single-session gains for bearish positions, per S3 Partners tracking data. The squeeze dynamics have now completely flipped.Options volume during the peak reached frenzied levels. More than 200,000 contracts changed hands Wednesday alone. Implied volatility soared to 235%, a stark contrast to the S&P 500’s approximately 20% reading.Charles Schwab implemented stricter margin rules on April 9. Clients holding concentrated positions now face 100% margin requirements, effectively mandating fully cash-funded transactions.Wall Street Downgrades Amid Fundamental ConcernsJPMorgan’s Ryan Brinkman cut his rating from Neutral to Underweight on Thursday. His revised price objective sits at $165, up from a previous $123.While raising his target by 34%, Brinkman emphasized the stock had climbed “far above the level we feel can be justified by even the most optimistic view of underlying earnings fundamentals.”He noted management might leverage the inflated valuation for capital markets activity, though that possibility alone couldn’t warrant maintaining even a neutral stance.Research outfit Fugazi highlighted concerning metrics. Despite generating $11.65 billion in yearly revenue during 2025, Avis recorded an $889 million net deficit. This came on the heels of a $1.8 billion shortfall in 2024.Total obligations total $25.3 billion. Shareholder equity registers at negative $3.1 billion. The enterprise produced approximately $0.56 in operating income for each $1.00 of interest obligations.Two major institutional players occupy central roles in this narrative. SRS Investment Management accumulated its stake over nine years via debt-financed float engineering, placing its own partners in CEO and Executive Chairman positions. Pentwater Capital Management pivoted to unhedged long positions in March 2026 through its Merger Arbitrage Master Fund.Their collective economic exposure surpassed 100% of CAR’s available float. With merely 36 million shares issued and an even smaller freely trading supply, conditions were ripe for violent price dislocations.Volume over the past two sessions alone topped 10 million CAR shares.Avis Budget plans to release first quarter 2026 earnings on April 29 at 7:00 a.m. Eastern, with a management conference call scheduled for 8:30 a.m. Eastern.The post Avis Budget (CAR) Stock Plunges 40% as Dramatic Short Squeeze Unravels appeared first on Blockonomi.