Shares of Avis Budget Group Inc ( CAR ) are trading sharply lower Thursday morning after a scathing report by Fugazi Research alleged the stock’s massive valuation was artificially inflated by a “prisoners’ dilemma” between two major hedge funds. Benzinga has reached out to Avis Budget Group ( CAR ) for comment regarding the allegations.

Avis Budget Group ( CAR ) shares are sliding. Why is CAR stock dropping?

Hedge Fund Concentration And The CAR Short Squeeze

Fugazi claims that SRS Investment Management and Pentwater Capital Management independently accumulated a combined economic exposure exceeding 100% of the rental car company’s outstanding shares.

According to the short seller, this quiet concentration of control held the available float hostage, resulting in a historically violent short squeeze that drove prices to six times the company’s fundamental value. This fragile structure began to violently unwind on Wednesday when shares plummeted 40% in a single session ahead of the company’s upcoming April 29 earnings announcement.

Extreme Debt And Distressed Fundamentals

Stripped of its squeeze mechanics, Fugazi paints a bleak picture of Avis’s underlying business, characterizing it as fundamentally distressed and burdened by extreme debt. The report highlights that Avis carries $25.3 billion in total indebtedness against a negative stockholders’ equity of $3.1 billion.

Furthermore, the company reported cumulative net losses of $2.71 billion across 2024 and 2025 despite generating $11.65 billion in annual revenue. Fugazi warns that a decade of debt-funded share buybacks has deteriorated the balance sheet, leaving the company generating only 56 cents in operating earnings for every dollar of interest it owes.

CAR Shares Slide Thursday Morning

CAR Price Action: Avis Budget Group ( CAR ) shares were down 35.13% at $288.00 at the time of publication on Thursday, according to Benzinga Pro data.

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