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This Week's Bonus Content
Avis, CarMax, and Carvana: 3 Car Stocks Sharply DivergeAuthored by Leo Miller. Article Posted: 4/20/2026. 
Key Points
- Avis Budget Group is shooting to the moon as short sellers take big hits.
- CarMax remains down significantly as it loses market share.
- Meanwhile, Carvana is taking share, putting the stock heavily in the green over the past 52 weeks.
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Car rental and used-car stocks are showing a wide divergence in performance. Three notable names across these industries are Avis Budget Group (NASDAQ: CAR), CarMax (NYSE: KMX), and Carvana (NYSE: CVNA). Their 52-week returns span from declines near 30% to gains approaching 500%. Here’s what’s driving the divergent performance and what Wall Street analysts are saying next. Avis Catapults on Suspected Short SqueezeOver the past 52 weeks, Avis Budget Group has gained more than 450% and is approaching the 500% mark. Since the end of March alone, Avis shares are up over 200%, including nine single-day gains of 10% or more. Analysts have largely attributed the explosive move to a short squeeze.
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Short squeezes happen when a large portion of a company’s float is sold short. If the stock rises, short sellers buy shares to cover positions and limit losses, which can push the price higher and trigger additional short covering. At the end of March, roughly 54% of Avis’s floated shares were sold short — an extremely high level that makes the stock a prime short-squeeze candidate. More recent reports indicate short interest has since increased to 58%, suggesting new shorts have been entering amid the rally and that further squeezes remain possible. That said, betting on potential short squeezes is very risky. Stocks driven by technical trading can fall as rapidly as they rise because fundamentals often don’t support elevated valuations. Case in point: Avis’s revenue fell about 1% in 2025, yet the stock trades at a forward price-to-earnings ratio near 130x. Wall Street analysts are broadly bearish: the MarketBeat consensus price target of $115 implies roughly 75% downside from current levels. CarMax Sees Big Losses amid CEO Departure, Falling SalesUsed-car reseller CarMax is down more than 30% over the past 52 weeks and has suffered several huge single-day declines. One notable drop — about 24% in November 2025 — followed the company’s announcement that its CEO would step down and the issuance of weak guidance. At that time, CarMax said comparable sales would decline 8% to 12% in Q3 of fiscal 2026. (CarMax’s fiscal reporting calendar runs ahead of the calendar year.) The company guided to earnings per share (EPS) of $0.18 to $0.36. Analysts had expected a comparable-sales decline nearer 3% and EPS above $0.60. CarMax ultimately reported a 9% comparable-sales decline and EPS of $0.43. Although those results were better than the company’s midpoint guidance, the stock still fell as investors reacted to the weaker outlook and leadership change. Even after CarMax beat expectations in its April 2026 report, the shares dropped another 15%, signaling limited longer-term confidence among investors. Analysts reflect that uncertainty. The MarketBeat consensus price target of $41.21 implies the stock is roughly fairly valued, but targets updated after the latest earnings report average about $35.50 — more than 10% downside from current levels. Carvana Grows Sales by 43% as CarMax DeclinesOne factor weighing on CarMax is the rise of Carvana. CVNA is up more than 80% over the past 52 weeks as it takes share from legacy used-car resellers. In 2025, Carvana sold 596,641 cars to retail customers — a 43% year-over-year increase. By contrast, CarMax sold 780,684 cars in FY2026, a 1.1% decline year over year. One year earlier, Carvana sold 416,348 retail vehicles while CarMax sold nearly 789,050, illustrating how Carvana’s customer base is rapidly expanding while CarMax’s is deteriorating. Unlike CarMax, which operates more than 250 traditional showrooms, Carvana has no physical stores. Transactions occur entirely online: the company acquires cars from sellers, refurbishes them, and delivers them to buyers. The model appears to be resonating with customers, reflected in Carvana’s rapid growth. Analysts are moderately bullish on Carvana. The MarketBeat consensus price target near $435 implies roughly 10% upside. Several targets updated in April are lower, with an April average around $411 (about 5% upside). Individual updated targets range from $335 to $475. Carvana will report Q1 2026 financials in late April, which could prompt significant revisions to those outlooks. Avis Stands Apart, CarMax and Carvana Jockey for ShareAvis Budget Group’s rally appears primarily driven by technical trading rather than changes in its position within the rental car market. By contrast, CarMax and Carvana represent opposite ends of the same story: an incumbent facing pressure from a digital-first disruptor. Carvana has ambitious long-term targets, aiming for 3 million annual retail vehicle sales between 2030 and 2035. Reaching that goal would require sustained annual growth in the roughly 18%–38% range. |
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