Why Avis and Hertz Stocks Jumped Wednesday
Shares of Avis Budget Group (NASDAQ: CAR) and bankrupt rival Hertz (NYSE: HTZ) jumped 11% and 8%, respectively, on Wednesday after news that Melvin Capital Management had opened up a position in Avis.
Riding alongside the late-afternoon broader market rally, Avis stock jumped double digits after Melvin Capital disclosed a 5.8% stake in the rental company. It's been a common theme among investors and analysts that Avis will benefit from the Hertz bankruptcy once travel and transportation demand returns, assuming the COVID-19 pandemic will eventually be under control.
That said, what happens with Hertz in bankruptcy is anyone's guess, and the company is still operating with its limited cash on hand while negotiations are held in bankruptcy court. As you can see, despite the initial short squeeze after Hertz filed for bankruptcy, investors have treated the two companies very differently, and appropriately so.
Source Fool.com
