TLDR
- Hertz stock fell 41% to $3.00 on Wednesday after warning of weaker-than-expected Q2 adjusted EBITDA of $50M–$80M
- Soft used-car market pushed net monthly vehicle depreciation to ~$300 per unit, above prior guidance
- Hertz announced a $100M common stock offering and a $300M (later upsized to $350M) exchangeable notes offering
- The stock is now down 28% year-to-date and nearly 50% over the past 12 months
- Hertz priced 37,037,037 shares at $2.70 each on June 25, with J.P. Morgan acting as underwriter
Hertz (HTZ) stock dropped 41% on Wednesday, hitting $3.00 per share — its worst single-day percentage decline on record. The sell-off was triggered by a Q2 earnings warning and a dual capital raise that rattled investors.
Hertz Global Holdings, Inc., HTZ
The company said it now expects second-quarter adjusted corporate EBITDA of $50 million to $80 million. That’s toward the low end of the range it had previously guided.
The culprit? A softer-than-expected used-car market. Hertz said weakness in May flipped what were gains from April vehicle sales into losses, pushing depreciation costs higher.
Net monthly depreciation — the value a rental vehicle loses each month — is now expected to come in at roughly $300 per unit for Q2. Last month, Hertz had flagged it would fall well below that level.
To raise cash, Hertz announced two concurrent offerings. The first: $100 million in common stock. The second: $300 million in payment-in-kind (PIK) exchangeable notes, later upsized to $350 million at 6.75%, due 2030.
Hertz priced 37,037,037 common shares at $2.70 each on June 25, lending them to underwriter J.P. Morgan Securities. J.P. Morgan will sell the borrowed shares, take a short position to help note buyers hedge, then return equivalent shares to Hertz later.
Hertz gets a nominal lending fee from the stock deal — but no direct proceeds from the share sale itself. Net proceeds from the notes are expected to be roughly $339.5 million, or up to $388 million if the overallotment is exercised.
The company plans to use the funds to repay borrowings on its revolving credit facility and for general corporate purposes.
A Rough Run
Wednesday’s drop piles onto an already painful stretch. HTZ is now down 28% year-to-date and roughly 50% over the past 12 months. Over the same period, the S&P Small Cap 600 — of which Hertz is a member — is up more than 19% and 34%, respectively.
The stock is currently trading 54% below its 52-week high of $7.97, set in July 2025.
Hertz has spent the past year trying to turn things around. It updated its fleet, cut costs, and struck a pair of deals with Uber in April to support Uber’s robo-taxi push — news that briefly sent the stock higher.
But the recovery has been fragile. The stock got a short-term lift earlier this year from travel disruptions tied to a partial government shutdown, then gave it back once TSA employees were paid and flights normalized.
Bankruptcy Shadow
The company’s 2020 Chapter 11 filing still hangs over it. Hertz entered bankruptcy as global travel collapsed and used-car values fell off a cliff. It famously became one of the first meme stocks, with retail traders sending the stock up 800% even in bankruptcy.
Hertz emerged from restructuring in June 2021, delivering over $1 billion in value to equity holders — a rare outcome.
Legal headwinds remain. In January, the Supreme Court declined to hear Hertz’s challenge to a lower court ruling, leaving the company on the hook for $270 million in interest payments owed to bondholders paid off early during the bankruptcy.
The most recent analyst rating on HTZ is a Sell, with a $3.00 price target.
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