Why Shares of Avis and Hertz Are Up Today
Shares of Avis Budget Group (NASDAQ: CAR) soared 29% at the open on Thursday morning after receiving an upgrade from Morgan Stanley. Car sales are holding up better than feared during the pandemic, according to the analyst, and that is good news both for Avis Budget and its bankrupt rival Hertz Global Holdings (NYSE: HTZ).
Avis Budget shares gave back some of those gains after the open, but were still up 19% as of 10:30 a.m. EDT.
While the business of renting cars is what comes to mind first when thinking of companies like Avis Budget or Hertz, the companies actually generate a substantial portion of their revenue from selling their used vehicles on the open market. The rental market is under pressure due to the COVID-19 pandemic, which has reduced travel demand and caused airlines to cut their schedules, and investors had assumed auto sales would be impacted by the pandemic as well.
Source Fool.com
