Key Takeaways
- Hertz shares collapsed 41% to $3.00 following a disappointing Q2 adjusted EBITDA forecast of $50Mâ$80M
- Deteriorating used-car market conditions drove net monthly vehicle depreciation to approximately $300 per unit, exceeding earlier projections
- The company launched a $100M equity offering alongside a $350M exchangeable notes deal (initially $300M)
- Year-to-date losses now stand at 28%, with a 50% decline over the trailing twelve months
- On June 25, Hertz priced 37,037,037 shares at $2.70 apiece through J.P. Morgan as lead underwriter
Shares of Hertz (HTZ) experienced their most catastrophic trading session in company history Wednesday, plunging 41% to close at $3.00. The unprecedented selloff followed a sobering earnings preannouncement and the simultaneous launch of two capital-raising initiatives that spooked the market.
Hertz Global Holdings, Inc., HTZ
Management disclosed that second-quarter adjusted corporate EBITDA would likely land between $50 million and $80 millionâclustering at the bottom of its prior forecast range.
The primary driver? Unexpectedly weak conditions in the secondary vehicle market. Hertz revealed that May’s softness reversed gains recorded from April’s vehicle disposals, triggering elevated depreciation expenses across its fleet.
The company now anticipates net monthly depreciation per vehicle to approximate $300 for the second quarter. This marks a significant deterioration from guidance issued just weeks earlier, when management projected figures substantially below that threshold.
To shore up its balance sheet, Hertz unveiled two parallel financing transactions. The first involves a $100 million common equity offering. The second consists of $300 million in payment-in-kind (PIK) exchangeable notesâsubsequently increased to $350 million at 6.75% interest, maturing in 2030.
On June 25, the company priced 37,037,037 common shares at $2.70 per share, loaning them to lead underwriter J.P. Morgan Securities. J.P. Morgan will offload these borrowed shares, establish a short position to facilitate hedging for note purchasers, then later return equivalent shares to Hertz.
While Hertz receives a minimal lending fee from the equity component, it won’t collect direct proceeds from those share sales. Net proceeds from the notes issuance are projected at approximately $339.5 million, potentially reaching $388 million if the overallotment option is fully exercised.
The raised capital will primarily retire outstanding balances on Hertz’s revolving credit line, with remaining funds allocated to general corporate needs.
Mounting Losses
Wednesday’s freefall compounds an already brutal performance trajectory. HTZ has shed 28% of its value year-to-date and approximately 50% over the past year. By comparison, the S&P Small Cap 600 indexâwhich includes Hertzâhas climbed more than 19% year-to-date and 34% over twelve months.
The current share price sits 54% beneath its 52-week peak of $7.97, reached in July 2025.
Throughout the past year, Hertz has pursued aggressive turnaround initiatives. Management refreshed the vehicle fleet, implemented cost-reduction programs, and finalized two strategic partnerships with Uber in April to advance Uber’s autonomous vehicle ambitionsâdevelopments that temporarily boosted shares.
Yet the recovery remains tenuous. Earlier this year, the stock caught a brief tailwind from travel disruptions stemming from a partial federal government shutdown, only to surrender those gains once TSA staff received back pay and airport operations stabilized.
The Bankruptcy Overhang
Hertz’s 2020 Chapter 11 bankruptcy proceeding continues casting a long shadow. The company filed for protection as pandemic-driven travel restrictions decimated demand and used-car valuations cratered. Notably, Hertz became an early meme stock phenomenon, with retail investors driving shares up 800% even during bankruptcy proceedings.
The company successfully exited restructuring in June 2021, remarkably delivering over $1 billion in value to existing shareholdersâan uncommon bankruptcy outcome.
Legal challenges persist. This past January, the Supreme Court refused to review Hertz’s appeal of a lower court decision, effectively obligating the company to pay $270 million in interest to bondholders who were repaid ahead of schedule during the bankruptcy process.
The latest Wall Street analyst rating pegs HTZ as a Sell with a $3.00 price target.
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