What happened

Shares of Avis Budget Group (CAR 3.62%) pulled back through the first six months of the year. The rental car company was one of many travel stocks hammered by the COVID-19 pandemic. Rival Hertz (HTZG.Q) was even forced into bankruptcy.

According to data from S&P Global Market Intelligence, the stock fell 29% through the first half of the year. As you can see from the chart below, Avis Budget has taken investors on a wild ride in 2020.

^SPX Chart

^SPX data by YCharts

So what

Avis began the year quietly after naming Joe Ferraro as its new interim CEO at the end of 2019. The stock started moving higher in February after the company appointed Bernardo Hees, the former CEO of Kraft Heinz, as its executive chairman. Shares spiked after the company's fourth-quarter earnings report on Feb. 19, in which the company smashed expectations and posted better-than-expected guidance for 2020. However, shortly after that, the stock began to plunge as the market crashed on the novel coronavirus threat.

A man looking at the Avis smartphone app to find a car.

Image source: Avis Budget Group.

On March 23, Avis issued an update saying that travel demand had dropped precipitously, that reservations were down 60%, and that April and beyond could bring further declines. The company said it took a number of actions to cut annual expenses by $400 million. It also said liquidity was solid, with $1.1 billion in cash available and no significant debt maturities until 2023.

In an April update, the company said sales had stabilized and were down about 80% year over year. The company raised another $500 million in debt in early May to give it more flexibility.

The stock started rallying in mid-May as the U.S. economy began to reopen and some economic data pointed to a faster-than-expected recovery. Avis stock actually surged when Hertz declared bankruptcy, as investors seemed to see this as an opportunity for Avis to gain market share. In June, the stock pulled back again thanks to mounting fears of a resurgence in COVID-19 infections.

Now what

While Hertz's bankruptcy should benefit Avis over the long run, the pandemic is going to significantly impact its financial stability going forward. With the fresh spike in COVID-19 cases, a quick travel recovery seems unlikely. The Transportation Security Administration is reporting that air passenger traffic is still down roughly 70% from a year ago -- a bad sign for Avis, since most of its business is tied to airports.

The company can survive the crisis, but there's no question that it will take a toll. Avis will be further burdened with debt that it can ill afford to take on, especially with ridesharing companies taking market share from rental cars.