After filing for Chapter 11 bankruptcy on May 22, car rental company Hertz ($NYSE:HTZ) began shifting its attention to selling vehicles and stock. Just unloading every last bit it can to make money, since the company is $17 billion in the hole.
Hertz can sell up to $1 billion in stock after a June 12 decision by the U.S. Bankruptcy Court for the District of Delaware. The contested decision ultimately angles for buyers that want to place speculative bets on stock that could soon be nonexistent. Robinhood investors in Hertz have increased in number following the bankruptcy filing, from 3,500 on March 18 to 43,000 on May 21 to 170,046 on June 12.
Whether they should do this is very questionable, because the company might not be around for very long and people shouldn't be spending their money on a zombie stock, but who are we to say.
This episode — Hertz declares bankruptcy and their stock skyrockets. ¯\_(ツ)_/¯ https://t.co/tPwYLjTGKm— NPR's Planet Money (@planetmoney) June 24, 2020
There was a recent steep drop in Hertz car inventory, from around 25k cars to 17.8k, within a day. That's a lot of used cars bought by people looking for a good deal! It won't be $17 billion worth of profit, but any company selling off its assets would be happy to see inventory go this fast. Even the average price is slipping.
After Hertz filed for bankruptcy, job listings for the company went up wildly, probably because a lot of people lost their jobs and there are now quite a few more openings, as morose as that is to say. On May 22, job listings were at 380 and exactly a month later on June 22, they were at 996. That's nearly triple, which shows Hertz is really in trouble and maybe people on Robinhood shouldn't be investing, just a friendly thought.
In close to the same timeframe, the number of employees identifying with Hertz on LinkedIn dropped by nearly a thousand. What a coincidence.
Hertz owes a little over $17 billion to various creditors, according to NPR Planet Money, and had $1 billion in cash as of May 22 to support operations. The company attributes much of its troubles to the pandemic, which we've heard before from companies looking to offload some blame onto outside factors. So a chapter 11 bankruptcy will enable the company to reorganize, maybe a little slimmer than before, if it can even do that considering there is no end to the COVID-19 pandemic any time soon in this country.
“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company's revenue and future bookings,” reads the press release.
Despite cuts to non-essential spending, Hertz went with bankruptcy due to the relative uncertainty about the future used-car market. Hopefully, Hertz emerges from this reorganization with a plan for recovery. Good luck to them.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.