What's Up With Hertz Stock Today?
Shares of Hertz Global Holdings (NYSE: HTZ), a vehicle rental company in the middle of bankruptcy, jumped over 10% before giving some gains back Wednesday.
First, it's important to note that investors should be taking Hertz's wild stock price swings with a big grain of salt, and with a $19 billion pile of debt it's almost certain that common shareholders will end up with no value. Hertz is currently appealing the NYSE's decision to delist the company, but in all likelihood shares of Hertz are slowly going to head to zero as the bankruptcy process plays out. Even today as the company's stock popped 10%, trading volume is at a very low 19 million, compared with its average 73 million volume.
Second, right now Hertz is in a battle with its creditors about how to deal with its roughly 500,000-vehicle fleet that is tied to asset-backed securities -- which represents most of that $19 billion in debt. As that fleet is essentially a whole package, what Hertz is attempting to do is get the bankruptcy court to turn the entire lease into roughly 500,000 separate agreements. That would enable creditors to liquidate some or all of those vehicle assets to recoup some of their financial investment, but it would also allow Hertz to keep some of those vehicles and make a smaller collateral payment if the value of those vehicle assets fluctuates. Bear in mind that a massive decline in those vehicle assets triggered a payment clause that Hertz couldn't afford, and that's why it's bankrupt.
Source Fool.com
