The Great CAR Crash of 2026
Welcome to the Schmoozeletter Blog. Your source for weekly water cooler wisecracks from the world of finance. If you have an opinion different than mine or a topic you want to hear about, let me know!
This week, we’re talking about:
The Great CAR Crash of 2026
I hear feedback a lot that people read this and have no idea what I’m talking about.
Maybe I should make this more relatable. Maybe I should talk about popular topics like one of the biggest companies around smashing their earnings:
Maybe I should avoid incredibly niche subjects like short squeezes off of unprofitable mid-cap rental car companies.
This is:
The Great CAR Crash of 2026
You might not fancy yourself a chart reader, but does the following daily chart of the stock price of Avis Budget Group, ticker symbol CAR, look normal to you?
Yeah, that isn’t something you see every day.
This here is shades of the ol’ GameStop days. Ladies and gentlemen:
We’ve got ourselves a short squeeze.
A short squeeze? Is that the mistress of Peter Dinklage, you may ask?
No, in the stock market you buy a stock and bet the stock price will go up.
Or, if your broker lets you, you can short and bet the stock price will go down.
Like Christian Bale in that movie that time.
The thing is, to short, you need to borrow shares. Essentially take out a loan and pay interest until you are no longer short.
It is the opposite of going long, where you buy the stock to start your trade and sell to get out.
When shorting, you sell the stock first and need to buy to cover to get out.
So what happens if a bunch of people get short and the price goes up?
Those people will want to get out of the trade to not lose too much money. The only way out is to buy to cover.
Then what happens if a bunch of people are buying a stock?
Which, in a nutshell, is what happened with CAR.
I will now take you inside the mind of a short seller.
The stock has a little run-up in share price…
And the company drops this SEC filing:
Avis says, “We are going to sell 5M shares of stock whenever we want.”
And a bunch of people get the same idea that the stock is going to go down.
On that last chart, the bar all the way to the right is March 27th, the day they filed with the SEC. Take a look at the next day:
Nice and red! No need to cover yet since this is just the start of the crater…
Shorts are feeling good!
Until you look at the week after.
A holy Thursday indeed.
And the week after that:
So now anyone shorting has lost money.
But at this point, it has tripled its value in a month. The fundamentals of the company, which aren’t good, haven’t changed. The price is over its all-time highs at $300 per share. And the company has 5M shares of stock they can issue at any moment and presumably make the price go down.
Seems like…
It is probably a good bet to go short again, right?
Cue the next week!
Alright, now it is up to $500 per share!
Shorts are saying, this has to be the top! How high can it go?
Seems like…
It is probably a good bet to go short again, right?
Alright, now it just went up $100 in a single day!
Shorts are thinking it can’t go on like this!
Seems like…
It is probably a good bet to go short again, right?
Now shorts are saying, “Okay! There is no top! This is a fucking freight train! I’ve blown up my account borrowing money to short this piece of shit, and it will go on forever!
I am done with this thing!”
Aaaaaand that’s the top!
So that is a short squeeze in a nutshell. Lots of money lost. Lots of money made. Especially if you are Pentwater Capital Management, LP.
