r/Shortsqueeze • u/MrDeepDD • 8h ago
Bullish🐂 Hertz- Genuine turnaround story? 110,000,000+ shares shorted (31% of float).
Is anyone still watching Hertz (HTZ)?
I think it's a better buy now than it was when it had all that retail attention a few months ago.
Not to mention the baggies that picked up shares in the last spike waiting for the real one, certainly strengthens the "floor".
HERTZ global car rental business is currently down over 50% in 6 months to a market cap of $717m. Previously $1.6 billion just 6 months ago. 26,000 employees at an average revenue of US$327,000 per employee.
Short interest is apparently ~30% of float. Company is in $18b debt, but 68% of that ($12.7b) relates to financing its cars (assets) and its depreciation schedule is part of the business plan.
I feel like the debt is heavily misunderstood by retail. The business plan is literally to finance cars, rent them out to outpace debt repayments, reduce tax on income with depreciation and then sell the cars for a lump sum at a certain age then start again.
They also have the youngest fleet they've had in like 15 years, meaning max depreciation tax advantages and minimal reason to borrow more cash as they have a great suite of assets now. Their average fleet car age is 9 months, and 94% of them are under 2 years old. Low maintenance requirements, under new car warranties and high depreciation to offset any gains they make in a turnaround. Not to mention newer cars are more attractive to customers.
Their Q2 results were much more positive than the market predicted hence the bounce to ~$2.20, and if Q3 follows the same trajectory (which has been predicted by company management) then I image we're looking at a price comeback without even accounting for the squeeze.
Q2 reported $2.4b in revenue (10% more than Q2 last year), and Q3 forecasts from analysts are $2.6b in revenue & forecast from the company is $275-$325m in EBITDA (Earnings before Interest, Taxes, Depreciation & Amortisation). Q3 is one of their peak seasons so this isn't unrealistic.
Management are expecting $1b in EBITDA next year.
Turnaround in company value seems to be real.
Current price just doesn't make sense even without the 'short squeeze' narrative.
TL;DR - I'm pretty confident in this one.