What Happened?
A number of stocks fell in the afternoon session after WTI crude jumped 3% to above $105 per barrel and Brent surged 5% to over $114, following the UAE's interception of Iranian missiles and renewed concerns about the Strait of Hormuz.
Fuel is the single largest variable cost line for trucking, rail, and parcel operators, and the sharp move higher immediately compresses operating margins unless carriers can pass through fuel surcharges quickly which is harder in a softening freight environment.
Furthermore, with jet fuel reportedly trading near $4.56 per gallon, nearly double pre-war levels, and analysts warning of potential rationing in Asia and Europe, the entire global logistics chain faced both a cost shock and a routing problem.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Ground Transportation company Old Dominion Freight Line (NASDAQ: ODFL) fell 6.8%. Is now the time to buy Old Dominion Freight Line? Access our full analysis report here, it’s free.
- Ground Transportation company Avis Budget Group (NASDAQ: CAR) fell 7.9%. Is now the time to buy Avis Budget Group? Access our full analysis report here, it’s free.
Zooming In On Avis Budget Group (CAR)
Avis Budget Group’s shares are extremely volatile and have had 38 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock dropped 49% on the news that a scathing short-seller report alleged the stock's recent valuation was artificially inflated, compounding a sell-off that began in the previous session and was accompanied by an analyst downgrade.
The stock's decline extended a more than 37% drop from the prior day as a massive 'short squeeze' dynamic, where investors betting against a stock are forced to buy shares, driving the price up, unwound.
A report from Fugazi Research claimed two hedge funds had gained control of over the company's shares, creating an artificial price spike.
The short-seller described Avis's underlying business as distressed and burdened by $25.3 billion in debt against negative stockholders' equity. Adding to the pressure, JPMorgan downgraded the stock from Neutral to Underweight. Concerns also grew over potential shareholder dilution, as the company might sell new stock to raise funds, given its weak balance sheet.
Avis Budget Group is up 30.9% since the beginning of the year, but at $167.88 per share, it is still trading 76.5% below its 52-week high of $713.97 from April 2026. Investors who bought $1,000 worth of Avis Budget Group’s shares 5 years ago would now be looking at an investment worth $2,014.
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