Avis Budget Group shares caved nearly 15% in before-hours trading Wednesday, after the rental car service posted a losses for the fourth quarter and downgraded its 2016 guidance Tuesday evening, pointing toward a stronger U.S. dollar and investment costs impacting the business.
The New Jersey-based Avis Budget Group (CAR) posted revenues of $1.9 billion for the fourth quarter, trailing behind the estimate of $1.94 billion, according to Zacks Investment Research.
The company, whose stock has halved in the last 12 months, also posted a disappointing 2016 outlook, reporting expected earnings to fall between $2.70 and $3.30, in comparison to the $3.43 analyst consensus.
Fourth quarter earnings also met analysts’ profit estimates, posting a loss of $5 million—6 cents per share or 18 cents per share adjusted for non-recurring costs. The company saw a profit of $23 million in the same period a year earlier.
Avis reporting expected revenue growth to fall between 2% to 6%, or $8.7 billion to $8.85 billion, in comparison to the $8.77 billion consensus.
“Our 2016 earnings outlook reflects incremental investments we are making in our business to enhance the customer experience we offer and expand our long-term margins,” the company stated.
The incremental investments will cost roughly $50 million, and go toward items including self-service technology, Zipcar expansion, and further growth in China.
“We won’t see that much margin growth in 2016… this is building up to see margin expansion in the 2017, 2018, years,” Avis Budget Group CEO David Wyshner said during their earnings call Wednesday.
Shares of competitor service Hertz (HTZ) also fell slightly in after-hours trading.