Investors keep waiting for Avis Budget Group to find its bottom. They are still waiting.
The car rental company posted a wider-than-expected Q1 loss on Wednesday and watched its stock drop again, even though revenue actually beat estimates. Hertz fell about 5% in sympathy.
Avis (CAR) reported a Q1 loss of $8.01 per share, well below the $6.87 loss Wall Street analysts had been modeling. Revenue came in at $2.53 billion, ahead of the $2.43 billion estimate, and Q1 net loss totaled $234 million.
There was actually a real positive in the report. Revenue per day rose 3% in both the Americas and International segments, and Avis posted its first revenue growth in the Americas in 10 quarters.
The market did not care. Shares fell 13.7% in pre-market trading and finished the day down roughly 12%.
Adjusted EBITDA losses persisted in the quarter, even as revenue ticked up. Investors are now well past wanting topline turn signals. They want operating leverage, and Q1 did not deliver it.
Avis stock has fallen 76% from its April peak. The company's vehicle fleet costs, depreciation expense, and interest costs have all weighed on the model.
Hertz dropped about 5% on the same day, suggesting investors are reading Avis's loss as a sector signal. The two companies do not run the same balance sheet, but they share much of the same demand and cost picture.
Avis's first Americas revenue growth in 10 quarters is a real data point. It just is not a profit data point. The next test is Q2, where the company will need to show whether the topline turn is actually flowing through to operating margins.
