Key Takeaways
- Hertz shares plummeted 41% to $3.00 per share following a revised Q2 adjusted EBITDA forecast of $50M-$80M
- Weaker used-vehicle market conditions drove monthly fleet depreciation to approximately $300 per vehicle, exceeding previous projections
- Company launched concurrent offerings: $100M in common equity and $300M in exchangeable notes (subsequently increased to $350M)
- Shares have declined 28% in 2025 and approximately 50% over the trailing twelve months
- On June 25, Hertz set pricing for 37,037,037 shares at $2.70 with J.P. Morgan serving as lead underwriter
Shares of Hertz (HTZ) experienced their most severe single-session decline ever on Wednesday, plunging 41% to close at $3.00. The dramatic sell-off came after the rental car company issued a disappointing earnings preview and unveiled plans for significant capital raising activities.
Hertz Global Holdings, Inc., HTZ
Management disclosed expectations for second-quarter adjusted corporate EBITDA between $50 million and $80 million. This projection sits at the lower end of the company’s prior guidance range.
The primary driver? Deteriorating conditions in the pre-owned vehicle marketplace. According to Hertz, May brought unexpected weakness that reversed positive trends from April’s fleet sales, resulting in elevated depreciation expenses.
The company now anticipates net monthly depreciation—measuring how much value each rental vehicle loses monthly—at approximately $300 per unit during Q2. This marks a significant increase from last month’s guidance suggesting substantially lower levels.
In response, Hertz initiated two simultaneous financing transactions. First, a $100 million common stock offering. Second, $300 million in payment-in-kind (PIK) exchangeable notes, which was subsequently expanded to $350 million carrying a 6.75% rate and maturing in 2030.
The company established pricing for 37,037,037 common shares at $2.70 apiece on June 25, lending these shares to J.P. Morgan Securities as underwriter. The investment bank will offload the 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 this stock arrangement, it won’t collect direct proceeds from the share transaction itself. The notes offering is projected to generate approximately $339.5 million in net proceeds, potentially reaching $388 million if overallotment options are fully utilized.
Management intends to deploy these funds toward retiring outstanding balances on its revolving credit line and supporting general corporate needs.
Extended Downturn
Wednesday’s collapse compounds an already challenging period for investors. HTZ shares have fallen 28% since January and roughly 50% across the past year. During this timeframe, the S&P Small Cap 600 index—where Hertz is listed—has gained over 19% and 34%, respectively.
The stock currently trades 54% beneath its 52-week peak of $7.97, reached in July 2025.
Over the past year, Hertz has pursued various turnaround initiatives. Management refreshed the fleet, implemented cost reductions, and secured two strategic partnerships with Uber in April to advance Uber’s autonomous vehicle ambitions—developments that temporarily boosted the stock.
However, the recovery trajectory remains unstable. Earlier this year, shares gained momentum from travel disruptions connected to a partial government shutdown, only to surrender those gains once TSA personnel received compensation and airport operations stabilized.
Bankruptcy Legacy
The company’s 2020 Chapter 11 filing continues casting a long shadow. Hertz filed for bankruptcy protection as worldwide travel demand evaporated and used-vehicle valuations plummeted. Notably, it became among the earliest meme stocks, with retail investors driving shares up 800% despite bankruptcy proceedings.
The company successfully exited restructuring in June 2021, remarkably delivering over $1 billion in value to equity stakeholders—an uncommon bankruptcy outcome.
Legal challenges persist. This past January, the Supreme Court refused to review Hertz’s appeal of a lower court decision, leaving the company responsible for $270 million in interest obligations owed to bondholders who were paid early during bankruptcy proceedings.
The latest analyst recommendation on HTZ stands at Sell, accompanied by a $3.00 price target.
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