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Here's Why Avis Budget Group (CAR) Stock Soared Today
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Shares of Avis Budget Group (CAR - Free Report) gained nearly 10% in morning trading Monday after the company reached a deal to manage the self-driving car fleet of Waymo, the autonomous vehicle division of Alphabet Inc. (GOOGL - Free Report) .
According to first reports from Bloomberg, Avis will service and store Waymo’s stock of self-driving Chrysler Pacifica minivans in Phoenix, where Alphabet has been testing a driverless ride-hailing service since April.
Bloomberg said that the companies chose not to share financial details, but its initial report indicated that the deal is in place for multiple years but not exclusive. Waymo will maintain ownership of the vehicles and pay Avis for its service.
For Waymo, the partnership is important because it offers the company a possible solution for its lack of an extensive existing vehicle network, which competitors like traditional carmakers and Uber Technologies have spread throughout the country. Nevertheless, shares of GOOGL were down about 0.7% through morning trading hours.
“With members of the public using our growing fleet of self-driving cars, our vehicles need standard maintenance and cleaning so they're ready for our riders at any time of the day or night,” said Waymo CEO John Krafcik in a press release. “Avis Budget Group is an ideal partner to provide fleet support and maintenance. With thousands of locations around the world, Avis Budget Group can help us bring our technology to more people, in more places.”
On the other hand, rental car companies like Avis are likely scrambling to figure out exactly how they will fit into the driverless car future. For entirely different reasons, Avis has been challenged by slumping revenues, so it seems like a great move for the company to establish itself with autonomous car leader in the early stages of the technology’s rollout.
“We are excited to partner with Waymo, the self-driving technology leader that is changing the mobility landscape in a profoundly transformative and beneficial manner,” said Avis president and CEO Larry De Shon. “Not only does this partnership enable us to leverage our current capabilities and assets, but it also allows us to accelerate our knowledge and hands-on experience in an emerging area as Waymo-enabled self-driving cars become available in the marketplace.”
The impact of the announcement was felt around the entire auto space this morning. Shares of Avis rival Hertz Global (HTZ - Free Report) were up nearly 6%, while fellow self-driving car innovator Tesla (TSLA - Free Report) slumped more than 1.5%.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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Here's Why Avis Budget Group (CAR) Stock Soared Today
Shares of Avis Budget Group (CAR - Free Report) gained nearly 10% in morning trading Monday after the company reached a deal to manage the self-driving car fleet of Waymo, the autonomous vehicle division of Alphabet Inc. (GOOGL - Free Report) .
According to first reports from Bloomberg, Avis will service and store Waymo’s stock of self-driving Chrysler Pacifica minivans in Phoenix, where Alphabet has been testing a driverless ride-hailing service since April.
Bloomberg said that the companies chose not to share financial details, but its initial report indicated that the deal is in place for multiple years but not exclusive. Waymo will maintain ownership of the vehicles and pay Avis for its service.
For Waymo, the partnership is important because it offers the company a possible solution for its lack of an extensive existing vehicle network, which competitors like traditional carmakers and Uber Technologies have spread throughout the country. Nevertheless, shares of GOOGL were down about 0.7% through morning trading hours.
“With members of the public using our growing fleet of self-driving cars, our vehicles need standard maintenance and cleaning so they're ready for our riders at any time of the day or night,” said Waymo CEO John Krafcik in a press release. “Avis Budget Group is an ideal partner to provide fleet support and maintenance. With thousands of locations around the world, Avis Budget Group can help us bring our technology to more people, in more places.”
On the other hand, rental car companies like Avis are likely scrambling to figure out exactly how they will fit into the driverless car future. For entirely different reasons, Avis has been challenged by slumping revenues, so it seems like a great move for the company to establish itself with autonomous car leader in the early stages of the technology’s rollout.
“We are excited to partner with Waymo, the self-driving technology leader that is changing the mobility landscape in a profoundly transformative and beneficial manner,” said Avis president and CEO Larry De Shon. “Not only does this partnership enable us to leverage our current capabilities and assets, but it also allows us to accelerate our knowledge and hands-on experience in an emerging area as Waymo-enabled self-driving cars become available in the marketplace.”
The impact of the announcement was felt around the entire auto space this morning. Shares of Avis rival Hertz Global (HTZ - Free Report) were up nearly 6%, while fellow self-driving car innovator Tesla (TSLA - Free Report) slumped more than 1.5%.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>