Avis stock extends crash after epic short squeeze

This is less a fundamental re-rating than a positioning air-pocket: once a stock gets forced-buy dynamics, the marginal buyer disappears quickly and the unwind tends to be sharper than the squeeze because shorts can re-enter on liquidity. The key second-order effect is that implied borrow scarcity and dealer hedging flows can now reverse into a negative feedback loop, with any bounce likely sold by both late momentum longs and newly confident shorts.

The market is also signaling that elevated ownership concentration plus a large disclosed anchor holder can be a double-edged sword. In names like this, a perceived “active backstop” can attract speculative flows, but when the thesis shifts from fundamental activism to narrative-driven trading, the stock becomes vulnerable to gap risk and overnight air pockets. That makes the near-term path more about flow exhaustion than about operating performance.

The contrarian setup is that the move may be overdone on the downside in the very short term, but underdone on the medium-term if valuation remains detached from earnings power. For a travel-and-leisure operator, any slowdown in consumer discretionary demand, weaker used-car residual assumptions, or normalization in rental pricing would matter much more over the next 1-3 quarters than the current headline volatility. The squeeze unwinds fastest when the market stops treating the name as a special situation and starts pricing it as a levered cyclical again.