Hertz’s Highways: Detours, Potholes, and the Uncomfortable Ride for Investors
When the road gets rough, even the most recognizable names can find themselves swerving. Over the last five days, Hertz Global Holdings, Inc. (NASDAQ: HTZ) has skidded a striking -17.7%, leaving investors clutching the armrest and peering anxiously at the dashboard.
Debt and Detours: The Cost of a Heavy Trunk
Hertz's recent tumble is less a mystery and more a case of mounting baggage. With total debt of $16.3 billion at year-end 2024 and liabilities ballooning to $22.3 billion by March 2025, the car rental giant is cruising with a dangerously overloaded trunk. Despite maintaining $1.1 billion in cash, the net debt picture is grim: $15.4 billion by the end of 2024, and a debt-to-equity ratio at an eye-watering 120.3.
Investors are right to worry. Interest coverage has turned negative, and the company’s adjusted corporate EBITDA for the trailing twelve months ending Q3 2025 sits at a paltry $1 million—barely enough to pay for gas, let alone service a mountain of debt. The free cash flow picture is even more unsettling: -$1.8 billion for the year ending December 2024.
Electric Dreams and Expensive Nightmares
Hertz’s bold foray into electric vehicles was meant to electrify its future. Instead, it has become a cautionary tale. The company’s aggressive EV fleet expansion collided head-on with tepid demand and high depreciation costs. In Q3 2024, Hertz took a $1.0 billion impairment charge—a costly U-turn that spooked markets and forced the company back to the drawing board.
Depreciation per unit per month soared to $539 for 2024 (up from $309 in 2023), and total vehicle utilization only nudged up to 79%, still below industry leaders. The result? A net loss of $2.9 billion for the twelve months ended December 2024, compared to a $616 million profit the year before. The market isn’t just nervous—it’s bracing for more potholes ahead.
Legal Crosswinds and Shareholder Turbulence
The journey hasn’t just been financial. A class action lawsuit filed in May 2024 alleges that Hertz misled investors, further clouding the company’s outlook. Legal reserves and litigation-related expenses are piling up, a distraction at best—and a material risk at worst. Meanwhile, short sellers are circling: 18.3% of the float is now sold short, with institutional sharks like Citadel and Millennium Management betting on further declines.
The Industry’s Changing Lane Markings
The car rental industry isn’t standing still. Competitors like Avis Budget Group are gaining media traction and earning more favorable analyst ratings. Hertz’s market share is being challenged as AI-managed fleets and digital platforms reshape the landscape. Despite positive industry growth forecasts—US market CAGR of 4.85% through 2035—the company’s transformation strategy is mired by execution risk, supply chain snags, and an unforgiving macroeconomic climate.
Adding to the uncertainty, geopolitical tensions and supply chain disruptions are rippling through the industry, making it harder for Hertz to control costs or plan for the future. With vehicle recalls affecting about 2% of its US fleet and pricing power under pressure, even a modest improvement in utilization hasn’t been enough to reassure Wall Street.
Analysts in the Rearview Mirror
Wall Street is sending a clear signal: consensus rating is “Reduce”, and the average price target of $4.90 is still 6.1% below the current price. The market is discounting Hertz’s optimistic talk of “transformation” and “discipline,” instead focusing on the hard numbers: eroding margins, negative free cash flow, and a capital structure that leaves little room for error.
The Road Ahead: Fog Lights On
Hertz has posted a +30.5% one-year return, but that’s little comfort after the recent -22.2% drop over six months and this week’s sharp selloff. For now, the company finds itself in the slow lane, with anxious passengers and a GPS recalculating every few miles. Until Hertz can lighten its debt load, resolve its legal clouds, and prove it can profitably manage a modern fleet, the journey promises to be anything but smooth.