Why Hertz Stock Jumped Another 19% on Monday
Shares of bankrupt vehicle-rental company Hertz Global Holdings (NYSE: HTZ) jumped almost 20% in early Monday trading -- likely riding some momentum from Friday's $1.65 billion debtor-in-possession financing -- before reversing and giving back all those gains. Here's what investors need to keep in mind.
After social distancing crippled travel and Hertz's rental demand, the company filed for bankruptcy protection on May 22 in a move that generally wipes out shareholders. Even famous billionaire hedge fund manager Carl Icahn threw in the towel and sold his more than 55 million shares.
Despite the likelihood of current Hertz shares ending up worthless for common shareholders, there continues to be a strange disconnect between the stock price and the reality of Hertz being a bankrupt company. That disconnect was in full force on Friday when the stock more than doubled as the company announced it had secured (subject to bankruptcy court approval) $1.65 billion in debtor-in-possession financing. That would enable Hertz to raise cash to continue operations while it finishes negotiating its bankruptcy with lenders.
Source Fool.com
