What Happened?
Shares of global car rental company Hertz (NASDAQ: HTZ) jumped 24.2% in the morning session after shares of car rental companies rose as the 25% tariffs announced by President Trump on all vehicles imported into the US suggested new vehicles might be more expensive.
The thinking on the Street is pretty straightforward: if new cars get more expensive, consumers might hold off on buying. That puts rental and car-sharing companies in a good spot. If buying a new car suddenly feels more expensive, people might start looking for cheaper, more flexible options. Renting for a weekend trip, or even month-to-month deals, start to make a lot more sense.
So investors are getting ahead of that curve. They're betting demand for these services picks up, which means better fleet utilization, stronger revenues, and possibly fatter margins for the big rental players.
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What The Market Is Telling Us
Hertz’s shares are extremely volatile and have had 74 moves greater than 5% over the last year. But moves this big are rare even for Hertz and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 12.9% on the news that the company reported a deeply disappointing fourth-quarter performance, missing Wall Street's expectations across all key metrics. Revenue fell 7% year on year due to weaker rental demand and lower pricing. Margins were under significant strain, as the company posted a sharp net loss, with adjusted EBITDA also deep in negative territory, highlighting ongoing cost challenges. Overall, these results left little room for optimism.
Hertz is up 13.8% since the beginning of the year, but at $4.25 per share, it is still trading 47.5% below its 52-week high of $8.09 from March 2024. Investors who bought $1,000 worth of Hertz’s shares at the IPO in June 2021 would now be looking at an investment worth $157.28.
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