What Happened?
Shares of car rental services provider Avis (NASDAQ:CAR) jumped 21.1% in the afternoon session after shares of car rental companies rose as the 25% tariffs announced by President Trump on all vehicles imported into the US suggested new vehicles might be more expensive.
The thinking on the Street is pretty straightforward: if new cars get more expensive, consumers might hold off on buying. That puts rental and car-sharing companies in a good spot. If buying a new car suddenly feels more expensive, people might start looking for cheaper, more flexible options. Renting for a weekend trip, or even month-to-month deals, start to make a lot more sense.
So investors are getting ahead of that curve. They're betting demand for these services picks up, which means better fleet utilization, stronger revenues, and possibly fatter margins for the big rental players.
The shares closed the day at $74.17, up 20.5% from previous close.
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What The Market Is Telling Us
Avis Budget Group’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. But moves this big are rare even for Avis Budget Group and indicate this news significantly impacted the market’s perception of the business.
Avis Budget Group is down 7.1% since the beginning of the year, and at $74.71 per share, it is trading 41.6% below its 52-week high of $127.91 from May 2024. Investors who bought $1,000 worth of Avis Budget Group’s shares 5 years ago would now be looking at an investment worth $5,100.
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