Lawsuit filed for Investors who lost money with shares of Avis Budget Group, Inc. (NASDAQ: CAR)

An investor, who purchased shares of Avis Budget Group, Inc. (NASDAQ: CAR), filed a lawsuit over alleged violations of Federal Securities Laws by Avis Budget Group, Inc. in connection with certain allegedly false and misleading statements.

Investors who purchased shares of Avis Budget Group, Inc. (NASDAQ: CAR) have certain options and for certain investors are short and strict deadlines running. Deadline: June 24, 2025. NASDAQ: CAR investors should contact the Shareholders Foundation at mail@shareholdersfoundation.com or call +1(858) 779 - 1554.

Parsippany, NJ based Avis Budget Group, Inc together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary products and services to businesses and consumers in the Americas, Europe, the Middle East and Africa, Asia, and Australasia. Avis Budget, Among other services, the Company operates the Avis brand, which offers vehicle rental and other mobility solutions to commercial and leisure segments of the travel industry; the Zipcar brand, a car sharing network; and the Budget brand, a supplier of vehicle rental and other mobility solutions focused primarily on more value-conscious customers. According to the Company, its global rental fleet totaled approximately 695,000 vehicles in 2024.
With hundreds of thousands of vehicles in its rental fleet, effective fleet management is critical to Avis Budget's profitability. This includes, among other things, ensuring proper fleet rotation-i.e., the replacement of older vehicles in a rental fleet with newer models. To execute this process effectively, a company must rotate its vehicles at an appropriate pace. If rotation is too gradual, older models may begin depreciating in value even as their maintenance costs steadily increase. Conversely, if rotation is too accelerated, a company risks prematurely removing vehicles before they have reached the end of their "useful lives"-the period during which the vehicles have recoverable value.

In discussing the significance of fleet rotation to its business and profitability, Avis Budget Group, Inc has stated that "[h]ow you buy cars and deliver them into your business and then exit cars out at the proper time at the right place is extremely critical" and, when analyzing buying and selling fleet vehicles, "one of the more important and overlooked aspects is how you rotate your fleet" given that "it allows you to have or maintain a certain age level or mileage level that is both operationally prudent from an efficiency standpoint as it turns out to be in light vehicle costs as well as from a customer acceptance. And we've been doing that."
In the years following the Covid-19 pandemic, due to a shortage of fleet supply, automobile rental companies were required to purchase fleet vehicles at higher prices than historic norms. To address this challenge, Avis Budget Group, Inc decelerated its fleet rotation by maintaining vehicles within its rental fleet for a longer period of time. As the Company stated in an earnings call held with investors and analysts to discuss its Q4 2024 results (the "Q4 2024 Earnings Call"), this practice purportedly "allowed [the Company] to depreciate vehicles across a flatter portion of the residual value curve and manage [its] fleet purchase to an appropriate return on invested capital."

Avis Budget Group, Inc. (NASDAQ: CAR) reported that its annual Total Revenue declined from over $12.66 billion in 2023 to over $11.62 billion in 2024, and that its Net Income of over $1.63 billion in 2023 turned into a Net Loss of over $1.82 billion in 2024.

However, in the fourth quarter of 2024, prices for vehicles model year 2025 began returning to normalized levels. In response, unbeknownst to investors, Avis Budget Group, Inc implemented a "change in strategy to significantly accelerate fleet rotations," purportedly designed to "create more certainty in [Avis Budget's] fleet costs and better position [the Company] for sustainable growth for 2025 and beyond."

On February 11, 2025, Avis Budget Group, Inc announced its financial results for the fourth quarter and full year 2024. Among other items, Avis Budget Group, Inc reported a loss of $1.96 billion, or $55.66 per share, for the quarter, compared to a profit of $259 million, or $7.10 per share, for the same period in the prior year. Avis Budget attributed these results to "a change in strategy to significantly accelerate fleet rotations, which resulted in shortening the useful life of the majority of our vehicles in the Americas segment[,]" causing "a one-time non-cash impairment of $2.3 billion and other non-cash related charges of $180 million."
Avis Budget Group, Inc also announced that the Company's Chief Executive Officer ("CEO"), Joseph A. Ferraro ("Ferraro"), "will transition from CEO to Board Advisor, effective June 30, 2025" and that "Brian Choi, the Company's Chief Transformation Officer, will take over as CEO, effective July 1, 2025."

Then, on February 12, 2025, Avis Budget Group, Inc hosted the Q4 2024 Earnings Call. During the Q&A portion of the Q4 2024 Earnings Call, Defendant Ferraro indicated that the Company was aware that accelerating fleet rotation would likely result in a significant impairment charge. Specifically, when asked to discuss the competitive landscape of the automobile rental industry in the wake of the normalizing price levels of vehicles model year 2025, Defendant Ferraro responded, in relevant part, "I can only comment on what we're trying to do as far as our fleet rotation. None of us took that impairment slightly, and we thought long and hard about it."

Shares of Avis Budget Group, Inc. (NASDAQ: CAR) declined from as high as $171.44 per share on February 12, 2024, to as low as $54.03 per share on March 13, 2025.

The plaintiff claims that between February 16, 2024 and February 10, 2025, the Defendants made false and/or misleading statements and/or failed to disclose that Avis Budget Group, Inc. crafted and implemented a plan to significantly accelerate its fleet rotation in the fourth quarter of 2024, that the foregoing acceleration shortened the useful life of the majority of the Company's vehicles in the Americas segment, thereby reducing their recoverable value, that as a result, Avis Budget Group, Inc. would be forced to recognize billions of dollars in impairment charges and incur substantial losses, that all the foregoing was likely to, and did, have a significant negative impact on the Company's financial results, that accordingly, Avis Budget's financial and/or business prospects were overstated, and that as a result, Defendants' public statements were materially false and misleading at all relevant times.

Those who purchased shares of Avis Budget Group, Inc. (NASDAQ: CAR) have certain options and should contact the Shareholders Foundation.

Contact:
Michael Daniels
Shareholders Foundation, Inc.
3111 Camino Del Rio North
Suite 423
San Diego, CA 92108
Tel: +1-(858)-779-1554
E-Mail: mail@shareholdersfoundation.com

About Shareholders Foundation, Inc.
The Shareholders Foundation, Inc. is a professional portfolio monitoring and settlement claim filing service, and an investor advocacy group, which does research related to shareholder issues and informs investors of securities lawsuits, settlements, judgments, and other legal related news to the stock/financial market. Shareholders Foundation, Inc. is in contact with a large number of shareholders and offers help, support, and assistance for every shareholder. The Shareholders Foundation, Inc. is not a law firm. Referenced cases, investigations, and/or settlements are not filed/initiated/reached and/or are not related to Shareholders Foundation. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.

This release was published on openPR.