Key Takeaways
- Hertz shares plummeted 41% to $3.00 following a bleak second-quarter adjusted EBITDA forecast of $50M–$80M
- Declining used-vehicle prices drove monthly depreciation costs to approximately $300 per vehicle, exceeding earlier projections
- The company launched dual capital raises: a $100M equity offering and $350M in exchangeable notes (initially $300M)
- Shares have declined 28% in 2025 and approximately 50% over the trailing year
- On June 25, Hertz finalized pricing on 37,037,037 shares at $2.70 apiece, with J.P. Morgan serving as lead underwriter
Hertz (HTZ) shares experienced an unprecedented 41% collapse on Wednesday, closing at $3.00 — marking the company’s largest single-session percentage loss ever recorded. The dramatic downturn followed a troubling second-quarter earnings preview and an announcement of significant capital-raising activities that spooked the investment community.
Hertz Global Holdings, Inc., HTZ
The rental car operator revealed that second-quarter adjusted corporate EBITDA is anticipated to land between $50 million and $80 million. This projection sits at the lower boundary of the company’s previous expectations.
What’s driving the shortfall? A weaker-than-anticipated market for used automobiles. Hertz explained that May’s deterioration in vehicle sales erased April’s gains, resulting in elevated depreciation expenses.
The company now projects net monthly depreciation — representing the monthly value decline per rental vehicle — at approximately $300 per unit during the second quarter. This figure significantly exceeds last month’s guidance, which suggested costs would remain well beneath that threshold.
In response to mounting financial pressures, Hertz unveiled two simultaneous capital-raising initiatives. The first involves a $100 million common equity offering. The second comprises $300 million in payment-in-kind (PIK) exchangeable notes, subsequently increased to $350 million carrying a 6.75% rate and maturing in 2030.
On June 25, the company finalized pricing for 37,037,037 common shares at $2.70 per share, lending them to lead underwriter J.P. Morgan Securities. The investment bank will market these borrowed shares while establishing a short position to facilitate hedging for note purchasers, subsequently returning equivalent shares to Hertz.
While Hertz receives a minimal lending fee from the stock transaction, it captures no direct capital from the share sale itself. The note offering is projected to generate net proceeds of approximately $339.5 million, potentially reaching $388 million if underwriters exercise their overallotment option.
Management intends to deploy the raised capital toward repaying outstanding balances on its revolving credit line and supporting general corporate operations.
Extended Decline
Wednesday’s selloff compounds an already challenging period for investors. HTZ shares have shed 28% year-to-date and roughly 50% over the past twelve months. During this same timeframe, the S&P Small Cap 600 index — which includes Hertz — has surged over 19% and 34%, respectively.
The stock currently trades 54% beneath its 52-week peak of $7.97, established in July 2025.
Hertz has dedicated the past year to operational improvements. The company refreshed its vehicle fleet, implemented cost reductions, and forged two partnerships with Uber in April to facilitate Uber’s autonomous vehicle initiatives — developments that temporarily boosted share prices.
However, the turnaround has proven unstable. Shares received a temporary boost earlier this year when travel disruptions stemming from a partial government shutdown increased demand, but those gains evaporated once TSA workers received compensation and air travel patterns normalized.
Bankruptcy Legacy
The company’s 2020 Chapter 11 bankruptcy filing continues to cast a long shadow. Hertz filed for bankruptcy protection as international travel evaporated and used-vehicle valuations plummeted. The company notably became among the earliest meme stocks, with retail investors driving shares up 800% despite bankruptcy proceedings.
Hertz completed its 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 consider Hertz’s appeal of a lower court decision, maintaining the company’s obligation to pay $270 million in interest to bondholders who were compensated early during bankruptcy proceedings.
The latest analyst assessment on HTZ carries a Sell rating, with a $3.00 price target.
