Just hours before Halloween, hapless investors in Hertz (OTCMKTS:HTZGQ) got the rudest of awakenings, not that it was a shocker. On Oct. 30, the New York Stock Exchange delisted Hertz stock, which had traded there since 1954. And the once mighty rental car colossus — which fetched more than $100 per share as recently as 2014 — ended the day at 65 cents per share. That’s not a trick or a treat: It’s a tragedy that…wait for it…really Hertz.
There can be zero doubt that this descent into penny stock hell was aided, abetted and accelerated by the novel coronavirus. Seldom if ever has something invisible to the eye caused so much visible economic harm, and the wreckage smolders everywhere investors look. When entertainment, restaurants, air travel and hospitality joined the list of savaged sectors, they also sent shock waves out to rental car companies with Hertz arguably hit hardest of all.
Yet the story of Hertz stock and its turbo tumble has more moving parts to it than just Covid-19. Between the summers of 2014 and 2017 — not exactly desert gulch years for the U.S. economy — Hertz shares lost 93% of their value. Now as Hertz tries to flat-tire it out of bankruptcy, the question may well be not how much potential the Florida-based company has, or has left, but how little.
Hertz Stock in a Bankruptcy Fender Bender
Some things money can’t buy, let alone rent, and in the case of Hertz stock, investor confidence in any form might be a thing of the past. You could say on the one hand that Hertz was hogtied given what the pandemic did to it. But the signals sent to shareholders in the spring weren’t exactly reassuring either.
On May 18, President and CEO Kathryn Marinello resigned just four days before a deadline to restructure leases for the Hertz rental fleet with lenders. A statement from Hertz chairman Henry R. Keizer that introduced the successor, Paul Stone, contained some unintentional black humor: “The Board elected Paul to lead Hertz’s next chapter.” As in Chapter 11 bankruptcy! Of course!
Since Marinello’s departure, Hertz stock has shed another 75%. Can there be any bright spots in all of this? I don’t think so, unless you stroll out to the airport rental lot, get on your knees, and buff up that front bumper nice and shiny-like in the blazing sun. Oh, wait. That’s right. No one goes to airports anymore.
Road Hazards Aplenty
Here’s the thing, and a mighty big thing it is: You risk more buying Hertz stock than driving a 1975 Ford Pinto with 210,000 miles blindfolded at 90 m.p.h. down the interstate. As I’ve opined in my coverage of Carnival (NYSE:CCL) and United Airlines (NYSE:UAL), I’m loathe to invest in anything travel related — unless you plan to hang in there for a good, long time to await a comeback that might never occur.
Meanwhile, questions pile up where the rental car lines used to be. When will a Covid-19 vaccine arrive to save the day, if at all? When will we return to our happy, upgrade-me-to-a-full-size-SUV selves, if at all? Or will Hertz give up the ghost and join the likes of the AMC Pacer in the automotive junkyard?
No matter on the vaccine thing, as Hertz has lost some pandemic-rattled customers for good. Not even Hertz spokesman-turned-convicted felon O.J. Simpson can get the company out of this mess with one of his swan leaps, not when the company is in a swan dive of nauseating proportions.
Steer Clear of Hertz
Having witnessed the resurrection of Citi (NYSE:C) from sub-dollar share levels, I will never say never. If 100 shares of Hertz stock will only set you back $86 at the current price, you can consider it a roll of the dice at your favorite riverboat casino and call it good. The question, though, is why?
Among so many companies that land in this kind of trouble, the story follows a familiar plot: fraud in the C-suite, products that explode, a massive data breach, industry disruption. But in all those cases, precedent points to a way forward and often a way out.
If you can explain to me how Hertz stock can go mano-a-mano with a virus that looks like a demon-possessed jackfruit, please tell me. Because I’d love to buy this bottom, make a killing and wing it to a tropical resort, where there’s a Hertz car waiting for me in the parking lot.
Oh, wait. That’s right. No one goes to airports anymore. Nor, perhaps, will they rent from Hertz anymore — not if Hertz isn’t around anymore.
On the date of publication, Lou Carlozo did not have (either directly or indirectly) any positions in the securities mentioned in this article.