A Hertz car rental in New York City.
Photograph by Cindy Ord/Getty ImagesAfter emerging from bankruptcy late Wednesday, new shares of Hertz Global Holdings surged to $35 on their first day of trading before trading down to around $19.
Hertz’s new 30-year warrants (ticker: HTZZW) that allow investors to purchase stock in the reorganized company traded around $11. Both securities trade over the counter.
The wild early trading in Hertz (HTZZ) may have reflected orders from retail buyers. Volume as at 10 a.m. Eastern time in the stock had run to about 500,000 shares.
Barron’s reported on Wednesday that the stock could open around $14 with the warrants around $9 based on the trading in old Hertz stock, which traded under the ticker HTZGQ.
Holders of the old stock, which finished Wednesday at $8.75, received a package consisting of cash, 3% of the stock in the reorganized company, and warrants—a long-term call option—on 18% of the reorganized company.
The cash portion was $1.53 a share on the old stock and Barron’s estimated that Hertz holders got less than a tenth of a new share for each old share and less than two-thirds of a warrant per old share. Hertz didn’t disclose those figures in announcing its exit from bankruptcy Wednesday.
Hertz is valued at about $9 billion based on an estimated 472 million shares outstanding.
The strong opening for Hertz stock helped lift shares of the company’s rival Avis Budget Group (CAR), which were up 5%, to $81.75. Hertz is now valued at a premium to the similarly sized Avis, which has a market value of about $5.5 billion. There also are an estimated 85 million to 90 million Hertz warrants outstanding.
The rental car industry, dominated by Hertz, Avis, and the private Enterprise, is having a great summer thanks to strong demand and a vehicle shortage, reflecting reduced new-car production in the auto industry because of chip shortages. Pricing is strong, with Hertz getting as much as $275 a day for midsize SUVs in popular markets. The company’s average daily rate was under $50 a day in the first quarter.
Hertz emerged from bankruptcy with a strong balance sheet and with little or no net corporate debt, as well as equity in the asset-backed securities trusts that finance its cars, Barron’s estimates.
Hertz sounded optimistic on its emergence from Chapter 11 protection, citing various initiatives taken by the company including cost cutting.
“These efforts, combined with a sharp increase in car rentals in the U.S. and the continued strength in used car sales, are putting the company on track for strong financial results in 2021,” Hertz said.
Write to andrew.bary@barrons.com
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