Legal Law

It turns out that Hertz’s future is not as promising as day traders had hoped

Before GameStop existed, there was Hertz: a pandemic-stricken legacy brand that was apparently destined for the junkyard inexplicably loved by the day-trading hordes. Of course, no two situations are perfectly analog, and there were some key differences here, namely that, unlike GameStop, there wasn’t a very good reason to believe that Hertz was anything but doomed. It didn’t have an inspiring investor with a turnaround plan, was about to be delisted from the New York Stock Exchange, and, oh yes, was bankrupt. But the people who run Hertz had the guts to do what the GameStop leaders didn’t, which was to throw their hands in the air and say, “Are you going to buy this stock? Here, have as much of it as you want. “

Of course, Hertz had to mention that the stocks, which were eagerly buying for about $ 2 apiece, would end up being worth almost exactly the same amount less once the bankruptcy cleared, so the SEC politely asked to stop selling them. That means these apparently illiterate people are now spending $ 29 million instead of $ 500 million.

Under Hertz’s restructuring proposal, shareholders will not receive a distribution, which means they will not receive any clawback from the proposed transaction. In the trading session after Hertz filed for bankruptcy protection, the shares plummeted to 56 cents. Less than two weeks later, they rose above $ 5.50 – a rally of nearly 900%. However, stocks fell in the days that followed. Since then, they have traded below $ 2 for the most part this year before finally falling below $ 1 on Wednesday.

Which, it should be said, is still 66 cents too high, oh forget it, some people cannot be reached or justified. So let’s look at someone who apparently can.

Melvin Capital, which previously placed a big bet against the video game retailer, posted a return of 21.7% in February, according to sources. The fund was down 53% in January during the dramatic short squeeze that rocketed GameStop and other stocks.

That’s nice for Steve Cohen and Ken Griffin. Anyway, while we’re doing a GME “where are they now”, where are the people who told us the GameStop (and Hertz) rally stories in the first place? Why, in a place with the most appropriate name.

Rocket company stocks … came under pressure after rising more than 70% on Tuesday to mark the best day ever with no discernible news. Rocket is one of the most shortened names of hedge funds. Almost 40% of the available stocks have been sold short, which may have made it attractive to the Reddit trading group.

What a time to be alive.

Hertz Stock Nosedives as a bankruptcy exit plan threatens to wipe out owners [WSJ]According to sources, Melvin Capital has a return of more than 20% in February [CNBC]Rocket Companies’ shares fall 30% after an irrational 70% pop in the heavily truncated name [CNBC]

Related Articles