What happened

Shares of Hertz (NYSE:HTZ), the well-known vehicle rental company in the middle of its bankruptcy process, dropped as much as 23% in morning trading Monday as investors come to the realization that its speculative stock price rise is most likely over.

So what

The Hertz stock roller coaster that started days after the company's bankruptcy protection filing on May 22, 2020, was one of the more unique developments in recent market history. The stock soared 1,462% from its May 26, 2020, low of $0.40 per share to its $6.25 intraday high on June 8, 2020. The speculative rise in Hertz stock could have been driven by investors unaware of how the bankruptcy process works. And while it likely fueled a short squeeze in the near term, the likely outcome all along has been that Hertz stock is heading to zero. Now that the circus surrounding the company's stock price appears to have calmed, the stock is likely to slowly lose its value as the bankruptcy process continues and Hertz faces delisting from the New York Stock Exchange (NYSE) sooner rather than later.

Car rental sign at airport

Image source: Getty Images.

Now what

HTZ Chart

HTZ data by YCharts

You can see the speculative Hertz price spike in the graph above, but investors would be wise to look at the broader trend since COVID-19 swept across the nation: The markets treated Avis Budget Group (NASDAQ:CAR) and Hertz very differently over the past three months. Avis has a potential future as it stands now, while Hertz will likely end up restructuring to form a new company -- or a number of other possible scenarios, including liquidation. Investors would be wise to expect further declines in Hertz stock until the bankruptcy court decides what the next step is for the company and its creditors. This is a reminder to investors who buy shares of highly speculative stocks: Broader markets will rebound from sell-offs, but not all companies will have the liquidity to survive disruptions such as COVID-19.