What happened: Avis Budget Group (CAR) stock was up as much as 8% on Tuesday morning, with this rise following a 23% surge on Monday. Over the past month, the stock is up over 500%.

What’s moving the stock: Avis appears to be facing a short squeeze.

The short interest in Avis as a percentage of shares outstanding currently stands at 25%, according to S&P Global Market Intelligence. That figure represents the portion of shares that are currently sold short and not yet covered: a ratio above 10% is considered high, while one above 20% is considered extreme, with a high risk of a short squeeze.

According to Deutsche Bank research analyst Chris Woronka, the squeeze was triggered at the beginning of the month by filings that showed two investors, SRS and Pentwater, controlled 71% of shares. When synthetic ownership via swaps is factored in, the two investors effectively controlled 108% of Avis shares, Deutsche Bank found.

What else you should know: This isn’t the first time Avis stock has experienced a sharp rally. In November of 2021, shares more than doubled, from $163 to $357, in one day following a strong earnings report and disclosure that the company repurchased 16% of its stock, Woronka wrote.

“Historical context for comparable short squeeze situations, as well as some apparent limitations on SRS + Pentwater’s ability to sell shares in the near term, both suggest to us that the stock could still squeeze higher from here, perhaps materially so,” Woronka wrote in an April 6 note.

“These factors are, of course, independent of incrementally positive sentiment on car rental fundamentals.”

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