Hertz to Investors: Your Stock is Worthless

The bankrupt car rental company faces delisting from the NYSE.

Anthony Russo
    Jun 15, 2020 9:10 AM  PT
Hertz to Investors: Your Stock is Worthless
author: Anthony Russo   

The stock in Hertz Global Holdings, Inc. (NYSE: HTZ) plunged 19% to $2.28 per share by midday Monday on its announcement that it will sell up to $500 million worth of common stock, but warned investors they could be wiped out.

In a filing today, the bankrupt car rental company said its shares could eventually become "worthless" and may need a miracle. The Florida-based company added it will need "a significant and rapid and currently unanticipated improvement in business conditions."

The lead underwriter on the deal is Jefferies LLC, which will receive as much as 3% of the gross proceeds and up to $200,000 for its lawyers. The news comes after a bankruptcy court late Friday approved Hertz's request for the sale of up to $1 billion in stock.

Since the beginning of the month, shares of Hertz have been volatile. Its stock in June has carried a trading high of $6.25 per share and a low of 78 cents per share. From today's intraday trading price, shares of Hertz are down more than 85% year-to-date. Recently, The New York Stock Exchange has sent the company a delisting notice.

Overall, today has not been a good day for the U.S. markets, as fears of a second wave have sparked another sell-off.  By midday, the Dow Jones lost more than 330 points, the Nasdaq Composite lost 41 points and the S&P 500 dropped nearly 1% to 3,013.44 points.

The U.S. reported 25,000 new cases on Saturday, marking the country's highest figure since May 2. Over the past few days Alaska, Arizona, Arkansas, California, Florida, North Carolina, Oklahoma, and South Carolina have all seen a significant rise in new cases.

"Our sense is that last week's selloff is a signal that concerns about the outlook are rising; however, expectations haven't come close being realistically reset," Wolfe Research analysts in a Monday research note.

For now, Hertz will remain listed pending its appeal. Either way, this stock has likely run out of gas for good.