Why Is HTZ Stock Surging Nearly 20% In Premarket Trading?

• Hertz’s revenue rose 10% to $2.396 billion despite Hertz operating with a 1% smaller fleet.
• Adjusted EBITDA improved to $81 million, even as recalls reduced revenue by $55 million.
• The company expects third-quarter adjusted corporate EBITDA of $275 million to $325 million and positive earnings per share.

Shares of Hertz Global Holdings, Inc (HTZ) jumped nearly 20% in premarket trading on Friday after the rental-car company delivered a smaller-than-expected quarterly loss, beat revenue estimates and pointed to strengthening pricing, profitability and cash flow.

HTZ stock surged 29% on Thursday, notching its strongest session in nearly nine months. Shares are up 27% for the week and remain on track for their best weekly performance over the same period. 

HTZ Q2 Review

Hertz reported a second-quarter (Q2) adjusted loss of $0.11 per share, narrower than the $0.24 consensus loss. Revenue rose 10% from the previous year to $2.396 billion, topping estimates of $2.28 billion despite a 1% smaller fleet.

“The commercial momentum…is really doing more with less,” CEO Gil West said on the earnings call. Revenue per day (RPD) climbed 9% to Hertz’s strongest Q2 level on record, excluding 2022, while revenue per unit (RPU) rose 8% to $1,542. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved by $63 million to $81 million, lifting the margin by 260 basis points to 3.4%.

The improvement came despite recalls surging 300% and reducing quarterly revenue by about $55 million and EBITDA by $30 million. Fleet utilization nevertheless increased 80 basis points to 79%, while Hertz’s spread between RPD and direct operating expenses widened 17%. Pricing momentum also continued into July, when Hertz recorded its 200th consecutive day of positive year-over-year RPD. “The core business is performing again,” West said.

Hertz Forecasts Positive Earnings 

Hertz expects third-quarter adjusted corporate EBITDA of $275 million to $325 million and positive earnings per share. It forecast full-year EBITDA of $225 million to $275 million and maintained its $1 billion target for 2027, when it expects full-year profitability and positive free cash flow.

The company ended the quarter with $984 million in liquidity and expects $1 billion to $1.4 billion at year-end. It plans to repay its remaining $200 million December 2026 maturity in cash.

“Candidly, the valuation of the business today is tough to understand,” West said, citing a “disconnect” between Hertz’s improving fundamentals and its market value.

Hertz plans to expand its capital-light franchise business and move more used-car sales into higher-yielding retail channels. Its Oro mobility platform and rideshare-rental business are expected to generate more than $600 million this year. Hertz also plans to support Uber’s robotaxi program using Lucid vehicles equipped with Nuro technology later this year.

How Do Retail Traders Feel About HTZ?

On Stocktwits, retail sentiment for HTZ jumped to a five-year high of 97/100, reaching ‘extremely bullish’ from ‘bullish’ a week earlier, as 24-hour message volume surged 1,907%.

HTZ stock hit a record high in November 2021 after emerging from bankruptcy with an unusually favorable recovery for existing shareholders, benefiting from rebounding travel demand and announcing a 100,000-vehicle order from Tesla. The stock also relisted on the Nasdaq that month under its current ticker.

One user said, “$HTZ I’m up like 60% on my shares. It’s time to do the responsible thing and sell…so I can roll the money into short-dated calls!”

Another user said, “$HTZ calling all active retail traders around the world have time to buy atleast 1 share and HOLD this goes in 3 digit in no time!!!  looks like it's now 85% shorted”

HTZ stock has declined 64% over the past year. 

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