Avis stock more than doubles after strong earnings show no end to rental car boom
Avis car company's shares more than doubled after Avis reported strong earnings on November 1 that easily topped Wall Street's forecasts.
By Paul R. La Monica, CNN Business
Avis Budget investors didn’t really need to try harder to make any money from the stock on Tuesday. The rental car company’s shares more than doubled after Avis Budget reported strong earnings Monday evening that easily topped Wall Street’s forecasts.
The stock was up as much as 218% at one point and was up “only” 110% in late afternoon trading Tuesday. It was halted several times because of volatility. Avis Budget is now up about 875% this year.
Avis Budget, along with rival Hertz, has benefited from a resurgence in leisure and corporate travel this year as millions of Americans have gotten vaccinated for Covid-19 and begun to take vacations and go on business trips again.
Investors also seem excited about the possibility that Avis could add more electric vehicles to its fleet of rental cars. Hertz says it has a deal with Tesla to buy some of its vehicles, even though Tesla CEO Elon Musk tweeted Monday night that a contract hadn’t yet been officially signed.
Avis Budget CEO Joe Ferraro did not mention Tesla specifically in a conference call with analysts Tuesday morning. But he did say that “we’ve had electric vehicles in our fleet in the past, and we will have more of them in our fleet going forward.”
“It helps us in consumer demand and also insulates us from maybe parts challenges or even a recall. So you’ll see us getting more and more involved in that as time goes on,” Ferraro added.
Ferraro also indicated that demand for rental cars in the United States for the remainder of the year should be extremely strong.
“The Americas booking patterns for the fourth quarter and holiday seasons appear robust and are currently outpacing 2019 levels,” he said during Tuesday’s call. “As of today, demand for Thanksgiving and Christmas appear as strong as in 2019.”
Avis Budget chief financial officer Brian Choi added that demand was also strengthening in Europe and starting to stabilize in Asia.
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