Hertz Roller Coaster Resumes in Wild Return After Bankruptcy

Hertz Global Holdings Inc. shares swung violently in their first session since the company emerged from bankruptcy on Wednesday.

The stock, which resumed trading over-the-counter under a new ticker “HTZZ”, bounced between massive gains and losses on Thursday before closing up 23% to $26.99. It opened at $22 and almost immediately surged more than 50% to $35 before reversing direction and tumbling to as low as $16, then rising again.

Hertz Roller Coaster Resumes in Wild Return After Bankruptcy

Volatility is nothing new for Hertz as the stock has been on a wild ride since the company filed for bankruptcy a year ago and its trading on the New York Stock Exchange was suspended in October.

Many investors are anxious to see when the shares will be listed on a formal stock exchange, which would mean improved access to capital, more liquidity and increased accountability. A Hertz spokeswoman declined to comment on listing plans.

Vehicle Shortage

The stock had been trading over-the-counter under the ticker “HTZGQ” for the past eight months as the shares soared from penny-stock status. Hertz rallied more than 500% in the first half of 2021 as investors bet on the company’s successful rebound from bankruptcy.

Hertz’s return couldn’t come at a better time. Americans are gearing up to take trips for the July 4 holiday, and the cost of renting cars is at eye-popping levels. The company could be held back by a shortage of available vehicles like the rest of the industry, but there’s plenty of pent-up demand for rentals.

Hertz’s surge over the past year was largely credited to retail investors, who have propelled different pockets of the stock market recently. A group of amateur stock pickers placed numerous risky bets on the company despite it filing for bankruptcy in May 2020, a trend that puzzled Wall Street pros last summer.

The company’s emergence from bankruptcy comes at a time when amateur trading has gone completely mainstream, with Morgan Stanley strategists even suggesting that Wall Street pros follow their smaller peers. Trading in so-called meme stocks is expected to continue gripping the market as corporate executives and investors adjust to the new normal.

A basket of 37 companies whose wild volatility forced Robinhood to impose trading restrictions in January has nearly doubled this year, posting gains that are more than six-times the return of the S&P 500.

Unresolved Issue

For bondholders, Hertz’s emergence from bankruptcy wasn’t so simple.

One dispute between noteholders and the company was left unresolved by the reorganization plan that Hertz implemented this week: should the company pay a so-called redemption price for paying off company notes as part of the restructuring.

A trustee for noteholders is demanding about $272 million. A U.S. bankruptcy judge will rule on the issue at a later date.

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