Hertz’s rival Avis made its electrification rhetoric, and its stock price soared by 200% in the intraday
Recently, there have been so many news about electric vehicles. First, one of the world’s largest car rental companies, Hertz, ordered 100,000 electric vehicles from Tesla, making Tesla’s market value exceed one trillion for the first time; later there were “Tesla rivals.” , California electric vehicle manufacturer Rivian launched an IPO to raise 135 million shares, becoming a high-profile blockbuster IPO in the electric vehicle industry.
On Tuesday, November 2nd, U.S. Eastern time, the multinational car leasing group Avis Budget Group (AVIS, stock code CAR) soared, soaring nearly 200%, bringing its market value to US$27.7 billion. Reach the highest point of Russell 2000.
The third-quarter performance exceeded expectations, causing the stock price to rise 200%, resulting in five trading suspensions
Avis’ stock price surged 200% to a record high on Tuesday. The stock price rose nearly 1000% from its January low this year. As millions of shares changed hands, the rapid rise in stock price triggered at least five trading suspensions. The reason is not like Hertz’s large-scale order to Tesla, but thanks to the third-quarter performance of this car rental company’s expectations of topping the list, and the CEO’s “big words” for electric vehicles.
In its earnings report released on Monday, the car rental company’s quarterly profit hit a record high, with sales exceeding $3 billion, as the high demand for rental cars in the summer months continues to push up prices. Revenue in the third quarter increased by 96% to US$3 billion, higher than market expectations and 9% higher than revenue in the third quarter of 2019. Analysts surveyed by FactSet expect Avis to have adjusted earnings per share of $6.87 and sales of $2.7 billion.
CEO Joe Ferraro said in a statement:
Our third-quarter performance proved our team’s continued attention to cost discipline and operational execution capabilities. As the travel environment continues to normalize, we will continue to build on this positive momentum.
Brian Choi, chief financial officer of Avis, responded to its competitor Hertz’s largest order in the history of electric vehicles, saying that this does not mean that they are not seeking potential deals for electric vehicles.
You did not receive our news publicly because for competitive reasons, we like to execute our strategy before announcing it.
Previously,The rental car company said it will play an important role in the increase in the penetration of electric vehicles in the United States, which subsequently caused enthusiasm among retail investors.. As its chief executive Ferraro said, “As the situation develops, we will be more active in the electric vehicle scene.”
In the past, there were electric vehicles in our fleet. In the future, there will be more electric vehicles in my fleet. We will play an important role in the growth of electric vehicles in the United States.
Will the car rental company, which has great electric car ambitions, increase or decrease its holdings? Analysts disagree
In fact, Avis has the most short positions in more than a year (calculated as a floating percentage), but it has not slowed the rate of the index soaring.
Retail investors who are enthusiastic about trading have pushed up market investment enthusiasm, and the brokerage TD Ameritrade has today imposed trading restrictions on Avis, including restricting certain option strategies and preventing short selling. Whether the market outlook continues to revelry or wailing, analysts are divided on its future performance. Morgan Stanley said it cannot maintain high profit margins for a long time, while JP Morgan Chase pointed out that the strong situation in the car rental industry is expected to continue for some time.
Morgan Stanley analyst Billy Kovanis (underweight) said that Avis achieved very high expectations in the third quarter, setting a record high Ebitda profit margin; that said, analysts still believe that 2021/2022 The year will become a cyclical peak, and it is believed that Avis will not maintain the current profit margin situation for a long time.
On the other hand, JPMorgan Chase analyst Ryan Brinkman (overweight) said that the record-breaking performance was driven by revenue growth. This was due to the soaring daily revenue RPD, in the Americas and international markets. Both hit record highs, and transactions have also picked up steadily at the same time. He pointed out that Avis’s stock price fell sharply after reporting a similar scale that exceeded expectations in the second quarter, triggering investor concerns about peaking performance.
According to JPMorgan Chase analysts, although the overall market rhythm in the third quarter may feel similar, they believe it is different because since the end of the second quarter, there has been a lot of evidence that the above-average normal conditions in the car rental industry may continue. a period of time.
Finally, Chris Woronka, an analyst at Deutsche Bank, said that if there is any weakness in the stock, he will think that it may be investors who have profited from the perspective of “doing their best and keeping their pockets safe.”
Despite their opinions, no analyst can explain today’s trend, which may have been caused by a strong burst of short covering.