Mon, 27-Jun-2022
Saturday 13 Jun 2020 , 10:49 am

Bankrupt Hertz to Seize on Speculation Frenzy with $1 Billion Stock Sale

Hertz’s shares have risen 250% since June 4, even though their value is likely to be wiped out by the end of its bankruptcy process as creditors take over the U.S. car rental company. The shares soared as much as 680% earlier this week.
By SIN Bureau
Share at:

Hertz Global Holdings Inc said it won bankruptcy court approval on Friday to sell up to $1 billion in stock, capitalizing on a remarkable rally in its shares driven by speculators defying conventional market wisdom.

Source: Official Facebook Page of Hertz

Hertz’s shares have risen 250% since June 4, even though their value is likely to be wiped out by the end of its bankruptcy process as creditors take over the U.S. car rental company. The shares soared as much as 680% earlier this week.

Investors, many of them amateur traders who use apps such as Robinhood, are betting on how high they can push the stock before it collapses. Record savings, stimulus checks, low interest rates and even lockdown boredom in the wake of the coronavirus outbreak have all been cited by market pundits as possible explanations for the extraordinary move.

The stock sale could benefit creditors seeking to recover more of their claims during the bankruptcy process. Hertz said in court filings that it would disclose to investors in the stock offering that the shares could “ultimately be worthless.”

“Hertz is acting as if it wasn’t bankrupt,” said UCLA Law School professor Lynn LoPucki. “The market thinks there’s equity in this company.”

Hertz, which had roughly $18.8 billion in debt at the end of March, is one of the largest companies so far to be undone by the coronavirus pandemic, which has crushed the travel industry.

Hertz is not the only U.S. company in bankruptcy whose shares have soared in recent days. J. C. Penney Company Inc, Chesapeake Energy Corp and Whiting Petroleum Corp have also seen similar rallies.

Hertz, which filed for bankruptcy protection on May 22, was among the most popular companies on the Robinhood app used by mom-and-pop investors earlier this month.

Read Here




Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

More from Neha Mule

Related News