“Stairs up, express elevator down” as hedge funds sock it to each other.
By Wolf Richter for WOLF STREET.
Avis Budget Group, an oldline rental-car stock in an inglorious tough business that had turned into a hedge-fund-driven meme-stock and had exploded by 770% since early March, has collapsed by 72% in about 26 hours, from the ridiculous intraday high of $847 yesterday morning to the still ridiculous $229 currently, as the massive hedge-fund powered meme-stock dynamics that had created an even more massive hedge-fund short-squeeze unwinds.
To the moon via the stairs, back to the stratosphere with the express elevator, while the heatshield burned up amid mixed metaphors. But this time around, retail investors weren’t the driver; hedge funds battling each other were.
By having imploded by 72% from the high, Avis Budget has now entered into our pantheon of Imploded Stocks, in possibly record time, for which the minimum requirement is a plunge of 70% or more from the all-time high. This collapse unwinds only a portion of the spike, during which the shares had exploded by 770% since early March, from $97 a share to $847 yesterday morning (daily chart via Investing.com shows December through midday April 23).
At some point, the plunge is going to stop, and possibly turn into a bounce, as the shorts are buying the stock to cover their short positions. But there is a ways to go back to earth.
Two hedge funds, SRS Investment Management and Pentwater Capital Management, held huge long positions, totaling 70% of the outstanding shares by March 25, according to SEC filings. SRS has been a big long-term holder of Avis and held about 50% of the outstanding shares. Pentwater disclosed in March that it built a 20% stake. The hedge funds also held cash-settled equity swaps, which further increased their exposure, according to the WSJ.
This intense buying pressure amid enormous short-interest had triggered the price explosion. Somewhere along the line, meme-stock-chasing retail investors must have jumped in for the ride to the moon, which allowed those hedge funds to start unloading their shares to retail investors while the stock was still rising, without jinxing the short squeeze.
The purpose was to create an enormous short-squeeze, as the stock was heavily shorted after a rough year and a big loss in 2025. Early in 2026, short interest was declining and reached a low in February of 45% of the float, which is still astronomical, according to the WSJ. Then the short interest started resurging again and yesterday exceeded 62% of the float.
The early shorts that had to buy back the shares at much higher prices soiled their shorts, so to speak. But the later shorts are now raking it in.
Social-media-empowered retail investors that jumped into the rally to the moon over the past week or so and failed to get out are now getting shredded, but YOLO.
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