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Avis has gotten an enormous boost from more people getting back on the road, and adding electric vehicles to its fleet could help give the company another huge source of revenue.

Shares of Avis Budget Group Inc nearly doubled on Tuesday as retail investors rushed to get a piece of the heavily shorted U.S. car rental company after its quarterly results beat Wall Street estimates.

Avis executives also said the company has been in talks with manufacturers regarding its plans to add more electric vehicles to its fleet going forward.

The stock was last up 84% at $315 following multiple trading halts for volatility, and is on track for its sharpest single-day percentage climb since 2009. Shares jumped as high as $545.11 earlier in the session.

The steep climb in Avis shares was evocative of the rally in shares of GameStop and other so-called meme stocks earlier in the year, driven in part by retail investors coordinating on Reddit’s WallStreetBets and other online forums.

About 21% of Avis Budget’s free float shares are shorted, data from S3 Partners showed, increasing its vulnerability to a phenomenon known as a short squeeze, where investors betting against a company are forced to unwind their positions after a rally in the stock price.

Short sellers were hit with $4.29 billion in mark-to-market losses at a surge to $481.50 in Tuesday’s session, S3 Partners’ managing director of predictive analytics Ihor Dusaniwsky said.

“The short squeeze could force some existing short sellers to close out all or part of their positions in Avis.”

Shares of rival Hertz jumped about 7%, reversing earlier losses.

Avis was among the top trending stocks with a 608% jump in message volume on investor-focused website stocktwits.com, indicating interest from small-time investors.

Total revenue of Avis surged 96% to $3 billion in the third quarter from a year earlier as higher number of COVID-19 vaccinations encouraged people to get back on the road. Excluding items, the company earned $10.74 per share.

Analysts had expected earnings of $6.52 per share on revenue of $2.71 billion, according to Refinitiv IBES data.

Nearly 24 million shares changed hands, easily making it the company’s busiest trading session this year. Avis shares boosted the Dow Jones Transportation Average by 6.2%.

(Reporting by Medha Singh in Bengaluru; Editing by Krishna Chandra Eluri)

This article was written by Medha Singh from Reuters and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.

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Tags: avis, avis budget, avis budget group

Photo credit: Avis Rental Group had a massively successful recent quarter No Swan So Fine / Wikimedia Commons

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