PreMarket Prep Stock Of The Day: Hertz

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

In the combined 50-plus years that the co-hosts of the show have been in the markets, neither of them have witnessed the ludicrousness of what is going on with Hertz Global Holdings HTZ.

Horrible Long-Term Performance: Although the company has been around for quite some time, the reorganization that it pulled off in 2016 is baffling. In November 2015, the company -- with the backing of Carl Icahn -- laid out a 3-5 year business plan to investors and financial analysts to revive the company, and they bought it hook, line and sinker.

Obviously none of what was proposed has come to fruition. Following its relisting at $46.70 in June 2016, it had a brief rally in July to $53.14 but faltered to end the year at $21.56.

Within one year of its relisting, Hertz shed 84% of its value when it bottomed in June 2017 at $8.52.

Icahn Throws In The Towel: On May 27, 2020, Icahn sold his entire 55.3-million share stake of his six-year investment, good for a $1.6 billion loss after the company filed bankruptcy.

Traders Step Up To The Plate: After trading around the $1 level for several days on lower than average volume, the issue leaped from 82 cents to $1.50 on June 5 on much higher than average volume. That rally flashed “get rich” signals to millions of Robinhood traders and other investors, which pushed the bankrupt company all the way to $6.25 on June 8. It retreated to end the session at $5.53.

Reality Sets In: Over the last three sessions, investors that chased the issue higher and then chased it lower as they attempted to exit into a falling market. After reaching $1.71 on Thursday, it rebounded to end the session at $2.06.

You Have To Be Kidding: In order to capitalize on its mysterious stock rally, the company wants a bankruptcy judge to sanction a deal with Jefferies LLC to sell 246 million unissued shares at $4 to raise approximately $1 billion to fund a potential turnaround.

At this time, the Street is not convinced this will happen as the issue has traded no higher than $3.47 in today’s and is under $3 at the time of publication.

For what the PreMarket Prep crew had to say about the saga, here is the segment when it was discussed on today’s show.

Photo credit: dhub limited, Flickr