What Happened?
Shares of global car rental company Hertz (NASDAQ: HTZ) jumped 28.6% in the pre-market session after Pershing Square Holdings, led by activist investor Bill Ackman, disclosed a $46.5 million stake in the company. This translated to more than 12.7 million shares. This development is noteworthy given that activist investors often bring about significant changes in targeted companies, focusing on improving asset monetization, expense efficiency, and stock buybacks.
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What The Market Is Telling Us
Hertz’s shares are extremely volatile and have had 82 moves greater than 5% over the last year. But moves this big are rare even for Hertz and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 20 days ago when the stock gained 24.2% on the news that shares of car rental companies rose as the 25% tariffs announced by President Trump on all vehicles imported into the US suggested new vehicles might be more expensive.
The thinking on the Street was pretty straightforward: if new cars get more expensive, consumers might hold off on buying. That puts rental and car-sharing companies in a good spot. If buying a new car suddenly feels more expensive, people might start looking for cheaper, more flexible options. Renting for a weekend trip, or even month-to-month deals, starts to make a lot more sense. So investors were getting ahead of that curve. They're betting demand for these services picks up, which means better fleet utilization, stronger revenues, and possibly fatter margins for the big rental players.
Hertz is up 12.1% since the beginning of the year, but at $4.18 per share, it is still trading 36.4% below its 52-week high of $6.57 from April 2024. Investors who bought $1,000 worth of Hertz’s shares at the IPO in June 2021 would now be looking at an investment worth $154.87.
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