Avis, CarMax, and Carvana: 3 Car Stocks Sharply Diverge

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.

Car rental and used car stocks are seeing a wide divergence in their performance. Three notable names across these industries are Avis Budget Group NASDAQ: CAR, CarMax NYSE: KMX, and Carvana NYSE: CVNA. Among them, 52-week returns stretch from falls of 30% to gains of nearly 500%. Let’s break down what’s driving the differing performance within this group and what Wall Street analysts are calling for next.

Avis Catapults on Suspected Short Squeeze

Over the past 52 weeks, the return of Avis Budget Group exceeds 450% and is approaching the 500% mark. Since the end of March alone, Avis shares are up more than 200%, with the stock posting nine single-day gains of 10% or more. Analysts have largely attributed the explosive rise in Avis to a short squeeze.

Short squeezes can occur when investors sell a large percentage of a company’s floated shares short. When the stock rises, short sellers must buy the stock to cover their positions and prevent larger losses. This causes the stock to rise even more, creating a vicious cycle of short covering and price increases.

At the end of March, investors sold short around 54% of Avis’s floated shares. This level of short interest is extremely high, making Avis a prime short-squeeze candidate.

More recent reports indicated that short interest has since increased to 58%. This signals that new traders are entering short positions amid Avis’s rise, making further squeezes possible.

Still, it is important to note that wagering on potential short squeezes is extremely risky. Stocks affected by these technical trading dynamics can plummet just as fast as they rise, as fundamentals often don’t align with valuations.

Demonstrating this is the fact that Avis’s revenue fell by 1% in 2025, yet the stock trades at a forward price-to-earnings ratio near 130X. Furthermore, Wall Street analysts have a highly bearish outlook on Avis. The MarketBeat consensus price target of $115 implies downside in the stock of about 75%.

CarMax Sees Big Losses Moves Amid CEO Departure, Falling Sales

Meanwhile, vehicle reseller CarMax is down more than 30% over the past 52 weeks. CarMax has seen several huge single-day losses during this time. This includes a 24% single-day drop in November 2025, after CarMax announced its CEO would step down, and the company provided extremely poor guidance.

At that time, CarMax said its comparable sales would fall by 8% to 12% in its Q3 fiscal year 2026. Note that CarMax’s fiscal reporting period is several quarters ahead of the calendar period.

The company also noted that its earnings per share (EPS) would come in between 18 cents and 36 cents. Analysts had forecasted a comparable sales drop near 3%, and EPS above 60 cents. CarMax ended up posting a comparable sales decline of 9% and EPS of 43 cents.

These were both better than the company’s midpoint guidance, but the stock still fell in response. Despite posting beats in its April 2026 earnings report, the stock tanked another 15% afterward, reflecting a lack of longer-term confidence among investors.

Wall Street analysts are generally echoing this uncertainty. The MarketBeat consensus price target of $41.21 implies the stock is fairly valued. However, targets updated after the company’s latest earnings report average around $35.50, implying more than 10% downside.

Carvana Grows Car Sales by 43% as CarMax Declines

CarMax’s fall is largely attributable to the rise of Carvana. CVNA stock is up more than 80% over the past 52 weeks, as the company continues to take market share from legacy used car resellers like CarMax. In 2025, Carvana sold 596,641 cars to retail customers, up 43% year over year (YOY). Meanwhile, CarMax sold 780,684 cars to consumers in its FY2026, falling 1.1% YOY. One year ago, Carvana sold just 416,348 retail vehicles to CarMax’s nearly 789,050. This shows how Carvana’s customer base is rapidly increasing while CarMax’s is deteriorating.

As opposed to CarMax, which operates over 250 traditional showrooms, Carvana has no stores. Buying and selling happens completely online, as the firm picks up cars from sellers, refurbishes them, and delivers them to eventual buyers. Given the growth of both firms, Carvana’s model is clearly resonating with customers.

Looking ahead, analysts have a moderately bullish tilt on Carvana stock. The MarketBeat consensus price target near $435 implies around 10% upside in shares. However, several targets updated in April are significantly lower. The average of April updates so far is $411, implying around 5% upside. Notably, these updated targets stretch as high as $475 and as low as $335. Carvana will report its Q1 2026 financials in late April, which could cause considerable shifts in price targets.

Avis Stands Alone, CarMax and Carvana Jockey for Share

Avis Budget Group stock is being driven primarily by technical factors rather than its positioning in the broader rental car market. Meanwhile, the stories of CarMax and Carvana are on opposite ends of the same spectrum, as Carvana disrupts the resale market.

Notably, Carvana has high long-term expectations for itself. The company hopes to reach 3 million annual retail vehicle sales sometime between 2030 and 2035. This would require significant annual growth in the range of 18% to 38%.