Hertz shares surge in premarket trading despite company filing for bankruptcy in US

Hertz’s stock rose 25% in Monday premarket trading, continuing the company’s jump from the previous week. Investors predict that the stock will open higher than its closing price of $2.84 on May 22. This was the trading session after which Hertz Global Holdings Inc. announced its bankruptcy.

Last week, the car rental company’s stock rose 8.8% on Thursday, while the Friday trading session ended with the huge jump of 71.3%, or 342 million shares. There were no official statements but it was revealed that Director Henry Keizer, Director Daniel Ninivaggi and North America Operations’ Executive Vice President, Joseph McPherson, all sold a significant amount of their shares.

Due to the global pandemic and travel restrictions, the company reported that the demand for its rental cars dropped significantly. With a debt of roughly $19 billion for the previous year, Hertz filed for Chapter 11 protection in order to restructure its debt. While Hertz filed for bankruptcy in the US, the company will continue its usual operations in the UAE, Europe, Australia and New Zealand.

Motivated by the recent resumption of travel businesses and the relaxing of restrictions, investors continue to bid on Hertz. Traders are speculating on the high volatility of the stock as airline companies, like American Airlines, announced an increase in their domestic flights in July. Many believe that this will also affect the demand for rental vehicles from and to airports, allowing Hertz to recover from bankruptcy.

Filing for bankruptcy does not mean that Hertz will cease its services. Since it is deemed an essential company, it will continue operating while trying to negotiate a deal with credit lenders.

Analyst stock price forecast and recommendation

According to MarketBeat, analysts have a consensus price target of $8.17 for Hertz Global Holdings Inc. The company has a potential upside of 217.8% compared to its current price of $2.57. These results are based on 7 research reports conducted in the past 90 days.

The same media also offers the recommendations of 8 investment analysts who have a consensus rating of “Hold” for the Hertz Global Holdings Inc. stock. Among the polled analysts, 1 ranked the company’s stock as “Buy”, 3 as “Hold” and 4 – as “Sell”.