The Madness Goes On! Bankrupt Hertz Stock Continues to Attract Risky Investors

Once again, Hertz has taken the spotlight in the investing scene. Shortly after the infamous car rental company filed for bankruptcy after it got crushed by the weight of the coronavirus pandemic, retail investors, for some unexplainable reason, rushed to purchase the bankrupt stock, causing it to increase by nearly 168%! All meanwhile billionaire investor Carl Icahn, was at the same time dumping his 55.3 million Hertz shares faster than you can say bankruptcy.

But the madness continues! It appears that investors are pushing their optimism about the distraught rental company to new levels. Right after regular trading commenced on Friday, Hertz’s stock was trading as high as $3.7 – which amounts to a 353% increase since close on Wednesday. Now either there is looming optimism about a rebound in the air travel industry, or the coronavirus pandemic has given rise to a swarm of extreme risk-seeking investors.

The new post-pandemic Hertz equity holders are exposing themselves to a significant risk, because once a company files for a Chapter 11 bankruptcy as per the US Bankruptcy Code, the said company has to repay all debts in full before payments to stockholders are made. However, some of that investor optimism may stem from the rebound of prices in the used car market. According to market researcher JD Power, used vehicle prices have increased to to the pre-virus forecast since suffering a historic decline in April. This may be good news for Hertz, which has a fleet of nearly 500,000 rental vehicles slated for used vehicle auctions in the next short while.

According to Jefferies analyst Hamzah Mazari, there is a very high probability that Hertz stock will not come out with a positive rebound. Optimistic equity holders are most likely going to be met with disappointment, because Mazari is anticipating a 90% chance that the stock will once again trade below $0.50 once the dust settles.

Information for this briefing was found via Bloomberg and JD Power. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Is Gold’s Bull Market About to Hit Junior Stocks? | Ken Armstrong – Westhaven Gold

Surge Battery Metals: The Nevada North Lithium PEA

Silver @ $36 & We’re Still 200M Oz Short | Paul Andre Huet – Americas Gold and Silver

Recommended

Goliath Resources Closes Out Funding Round With Total Gross Proceeds Of $27.1 Million

Silver47 Kickstarts 4,000 Metre Drill Campaign At Red Mountain Project

Related News

Hertz Slashes Prices on Electric Vehicles Rented From Its Fleet

Hertz Global Holdings (NASDAQ: HTZ) is employing a unique strategy to mitigate ongoing losses in...

Wednesday, January 1, 2025, 10:40:09 AM

Car Rental Company Hertz Preparing for Bankruptcy Filing

As the rapid spread of the coronavirus resulted in economic lockdowns and stay-at-home orders, many...

Thursday, April 30, 2020, 10:00:00 AM

Rental Car Firms Cancel New Vehicle Orders, Struggle To Store Fleet

Rental car firms have begun cancelling new vehicle orders from manufacturers across the US as...

Saturday, May 9, 2020, 01:39:00 PM

Hertz Granted Additional Time to Get Financials in Order

The rapid spread of the deadly coronavirus has caused governments to significantly restrict movement by...

Wednesday, May 6, 2020, 02:18:00 PM

Robinhood Pays $65 Million to Settle SEC Charges Over Misleading Customers About its Revenue Sources

When it rains, it pours! Only a day after a Massachusetts regulator filed a complaint...

Thursday, December 17, 2020, 11:04:38 AM