Please ensure Javascript is enabled for purposes of website accessibility

Why Hertz Stock Is Tumbling Today

By Rich Duprey – Apr 24, 2020 at 11:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The car rental company's stock has fallen 80% since February.

What happened

Hertz (HTZG.Q) stock slid 10.5% in morning trading after it began working with debt restructuring advisors to avoid a bankruptcy filing as it combats the loss of demand for rental vehicles amid the coronavirus pandemic.

Earlier this week the car rental agency announced it was furloughing 10,000 employees in North America.

Coupled being handed key to rental car

Image source: Getty Images.

So what

Hertz, which also owns the Dollar, Thrifty, and Firefly car rental brands, is heavily reliant on the travel industry, with each of its brands maintaining counters at airports. Airport concessions accounted for 65% of Hertz's revenue in 2019.

As the COVID-19 outbreak has decimated air travel, the airlines themselves are in line to receive bailouts from the federal government. Hertz and Avis asked Congress to include the industry in any stimulus package passed, but car rental agencies were excluded.

Ratings agency Fitch Ratings has since revised its outlook on the industry, and now expects Chapter 7 bankruptcy filings followed by fleet liquidations.

Now what

Bloomberg reports Hertz has hired restructuring specialist Moelis & Co. to potentially work with the company's debt holders to allow it to issue more debt. No restructuring is imminent, though, and Hertz is seemingly not in danger of going under at the moment, as it had $1 billion in liquidity at the end of 2019 with no debt maturities until 2021. 

Shares of Hertz have fallen over 80% since the middle of February.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Hertz Global Holdings, Inc. Stock Quote
Hertz Global Holdings, Inc.
Avis Budget Group, Inc. Stock Quote
Avis Budget Group, Inc.
$143.58 (-7.93%) $-12.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.