Investor accuses Pentwater of manipulating Avis stock in short squeeze

An investor says investment firm Pentwater Capital drove up Avis Budget Group's stock, then sold shares for $1.75 billion as the price collapsed. 

That is the claim in a proposed securities class action filed July 31, 2026, in the US District Court for the Middle District of Florida. The lead plaintiff, an Avis shareholder, sued Pentwater Capital Management on behalf of investors who bought Avis stock during the period covered by the case. The firm's founder and chief executive is also named as a defendant. The case is docketed as No. 2:26-cv-02275. 

For anyone running a fund or holding a large position, the allegations are worth a close read. According to the complaint, Pentwater built a big stake in Avis - more than 22% of the company's shares by early April 2026, with extra exposure through call options and swaps - and its heavy buying steadily pushed the price up. The filing alleges that this buying, combined with heavy short interest in the stock, set off what it calls a "short squeeze," forcing investors who had bet against Avis to buy shares at higher and higher prices to close out their positions, which drove the price up further. 

The numbers stand out. The complaint says Avis closed at $99.90 on March 20, 2026, then reached a $713.97 close on April 21 - a rise of more than 614%. Then it turned. The filing alleges Pentwater sold 4.3 million shares on April 22 and 23 for $1.75 billion, and that the stock collapsed to a $182.005 close on April 28, down 74.51% from its April 22 close. 

The complaint describes the conduct as a "scheme to manipulate the market for Avis securities" and a "pump-and-dump scheme." It brings claims under Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. 

There is a compliance backdrop advisors will recognize. Once the firm crossed 10% ownership in February 2026, the filing says, it became a corporate insider subject to Section 16(b) - the "short-swing profit" rule that requires holders of more than 10% to give back profits on stock bought and sold within six months. According to the complaint, Avis disclosed in June 2026 that Pentwater had agreed to pay the company $650 million to settle a Section 16(b) claim, a deal the filing says is subject to court approval. 

The complaint also draws on Avis's own account. It cites Avis's chief executive, who told investors on an April 29 earnings call that the firm had crossed the 10% threshold, disclosed a large economic interest in the company, and later sold heavily over a short window. According to the filing, he told investors that Pentwater had acknowledged its sale was, at least in part, a violation of the Section 16 short-swing rule. 

The allegations have not been tested, and no court has ruled on the claims. The complaint reflects only the plaintiff's allegations.