What Happened?
Shares of global car rental company Hertz (NASDAQ: HTZ) fell 11.2% in the morning session after downbeat commentary from an executive regarding the fourth quarter overshadowed a recent earnings beat, leading to a sharp reversal from the previous day's gains.
The decline followed a massive 36% surge in the prior session, which was fueled by the company reporting its first quarterly profit in two years. However, enthusiasm cooled after Hertz's Chief Commercial Officer, Sandeep Dube, warned of "softness" in the upcoming months. Dube attributed the expected weakness to a seasonal slowdown in leisure travel combined with the impact of a government shutdown. Adding to the pressure, BofA Securities maintained its "Underperform" rating on the stock. Despite the quarterly profit, revenue still fell by about 4% compared to the previous year, highlighting ongoing business challenges.
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What Is The Market Telling Us
Hertz’s shares are extremely volatile and have had 63 moves greater than 5% over the last year. But moves this big are rare even for Hertz and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 39.5% on the news that the company reported third-quarter financial results that significantly beat Wall Street expectations.
The company posted revenue of $2.48 billion, topping estimates, and an adjusted profit of $0.12 per share, which was 83.8% higher than the consensus forecast of $0.07. This result marked a notable turnaround from a loss of $0.68 per share in the same quarter last year. Hertz also generated a strong free cash flow of $809 million, a substantial improvement from a negative $154 million a year ago. The positive results for profit and cash flow came despite a 3.8% year-over-year decline in revenue, suggesting improved operational efficiency and giving investors reason for optimism after a difficult period for the company.
Hertz is up 64.6% since the beginning of the year, but at $6.15 per share, it is still trading 28.9% below its 52-week high of $8.65 from April 2025. Investors who bought $1,000 worth of Hertz’s shares at the IPO in June 2021 would now be looking at an investment worth $227.54.
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