Is CAR a good stock to buy?
We came across a bearish thesis on Avis Budget Group, Inc. on Fugazi Research’s Substack
In this article, we will summarize the bears’ thesis on CAR. Avis Budget Group, Inc.’s share was trading at $179.10 as of June 8th. CAR’s trailing and forward P/E were 8.00 and 5.25 respectively according to Yahoo Finance. nito/ Avis Budget Group is a highly leveraged car rental operator that generated $11.65 billion in revenue in 2025 while reporting a net loss of $889 million, following a $1.8 billion loss in 2024, bringing cumulative two-year losses to $2.71 billion amid persistent margin erosion and rising financing costs.
The company carries $25.3 billion in total indebtedness against negative shareholders’ equity of $3.1 billion, reflecting an impaired balance sheet where liabilities exceed equity value and downside protection is effectively absent at the equity level. 15 AI Stocks That Are Quietly Making Investors Rich Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential Operating performance is insufficient to support its obligations, with only $0.56 generated per $1.00 of interest expense, underscoring a sub-investment-grade coverage profile and heightened refinancing fragility. Its fleet-based model requires a large annual vehicle rotation funded largely through $19.2 billion in asset-backed debt and $6.8 billion in mandatory purchase commitments, exposing it to residual value compression and demand weakness that can rapidly translate into further earnings deterioration. Management’s prior capital allocation, including $10.75 billion in share repurchases financed partly with debt issuance, has compressed equity while increasing fixed obligations and amplifying downside sensitivity to any earnings shortfall.