More than a year after filing for Chapter 11 bankruptcy, Hertz Global Holdings Inc. (OTC:HTZGQ) stock is seeing an uptick in shareholder interest. Why is there renewed interest in Hertz stock, and will it last?
In short, Hertz has climbed its way out of bankruptcy in less than 14 months. Here's what happened and what to expect.
Hertz stock is going wild in the short term
In the week since June 25, Hertz's OTC listing has increased 28.53 percent, which brings the share price up a notch. The last month has brought 39.4 percent of growth to the position—a metric that soars to 572.3 percent from a YTD perspective.
Anyone doing surface-level due diligence on Hertz stock can see this major increase, but looking from a longer lens shows a more saturated picture.
Hertz stock still has a long way to go to reach long-term gains
Founded more than a century ago in 1918, Hertz has been public since 2006. The shares have trended downward since the peak in August 2014 when the stock hit a record $106.15 per share. Investors who tapped into Hertz in the mid-2010s have lost an estimated 90 percent of their investment.
A lot of the loss has to do with fraudulent management during the tenure of former CEO Mark Frissora. Ultimately, the SEC charged Frissora with aiding and abetting the company in filing inaccurate financial records.
What news is contributing to the success in Hertz stock?
After working tirelessly to pay back creditors and crawl out of debt, Hertz made plans to officially exit bankruptcy on June 30. Late on June 30, the company announced that it has officially done so by the expected date—a forecast many recent investors were banking on.
Earlier in June, a bankruptcy court confirmed the Hertz reorganization plan that would allow the company to exit bankruptcy by the specified date. Doing so could mean a long life ahead for the centenarian. Now that Hertz has confirmed the exit, investor confidence is growing.
Hertz, once buried by $20 billion in debt thanks in part to the COVID-19 pandemic, now has nearly $6 billion in new equity capital. This stems from Knighthead Capital Management LLC and other investment firms.
The company trimmed its debt by a quarter and completely eliminated corporate debt on its European arm.
A bankruptcy exit is huge for Hertz shareholders, including WallStreetBets players
Hertz stock has been halted by regulators multiple times over the last year due to frenzied Reddit investors hailing from the WallStreetBets subreddit.
Now that Hertz has announced its exit from bankruptcy, existing shareholders who bought in during Hertz's downtimes will likely profit. However, it has only been months since people in the Hertz company itself warned investors that their equity in the business might be worthless.
The stock, which is currently listed on the over-the-counter market after being delisted from the NYSE due to its bankruptcy filing, will eventually transition back to its previous exchange. The ticker symbol "HTZZ" is en route as we speak, although the general public hasn't been able to access it yet.