By Nicholas G. Miller

Shares of Avis Budget Group sank after the company reported a fourth-quarter loss well wider than analysts' expectations, which its leadership said was a result of difficult industry dynamics.

The stock dropped 23% to $94.88.

"We fell significantly short of guidance. That's unacceptable, and I have no excuses to offer. What I will say is that the decisions we made were grounded in the information we had at the time," said Chief Executive Brian Choi in the company's earnings call.

The car-rental company said its struggles in the quarter began with last year's government shutdown, which reduced discretionary travel by grounding flights and extending security wait times.

Weakened demand and excess industry supply then pressured pricing across the market, Choi said.

That decrease in demand also forced the company to reduce its fleet size at an inopportune time. During the fourth quarter, dealers are focused on clearing new model year inventory and offer aggressive new-car incentives that pressure used-car pricing. That meant that Avis diminished its fleet size in unfavorable market conditions, leading to lower gains on vehicles sold and a lower valuation on the fleet it retained, Choi said.

Additionally, the company logged $518 million in charges tied to a pivot from electric vehicles. Avis said the decision was part of a broader recalibration in how the automotive industry thinks about EV economics.

The company said December and January trends suggest the market has stabilized but that the health of the used car market won't be fully known until tax-refund season later this spring.

Avis said it would shift its strategy away from carrying excess cars going forward. "While we don't control macro events like government shutdowns, we can control how nimble we choose to be as a company. Running a tighter fleet reduces the risk of being caught off-footed when demand unexpectedly softens," Choi said.

Write to Nicholas G. Miller at nicholas.miller@wsj.com.

(END) Dow Jones Newswires

February 19, 2026 13:24 ET (18:24 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.