Hertz Global Shares Are Plunging Following Q1 Earnings Miss: What's Driving The Sell-Off?

Hertz Global Holdings Inc. HTZ shares are trading lower Tuesday after the company reported disappointing first-quarter financial results that missed both revenue and earnings expectations.

What To Know: The rental car company posted first-quarter revenue of $1.81 billion, below the $2 billion analyst consensus, representing a 13% year-over-year decline. The company also reported a first-quarter adjusted loss of $1.12 per share, versus an expected loss of 97 cents per share.

The revenue shortfall was primarily attributed to an 8% reduction in fleet size compared to the prior year. Hertz said the move was part of a strategic shift to run a leaner operation amid macroeconomic uncertainty, while simultaneously capitalizing on strong residual vehicle values to rotate older vehicles out of its fleet. The company highlighted that more than 70% of its U.S. rental fleet is now less than 12 months old.

Vehicle depreciation fell 45% year-over-year and Hertz noted that its 2025 model year cars are already meeting a target of less than $300 per unit in depreciation for the second quarter. Despite the near-term challenges, the company reaffirmed that it remains on track to reach positive adjusted corporate EBITDA by the third quarter of 2025.

Looking ahead, Hertz acknowledged signs of moderating demand across corporate, government and U.S. inbound travel segments. However, the company noted that forward bookings for leisure rentals are up on a year-over-year basis. The company plans to enter the summer season with a relatively tight fleet to take advantage of favorable residual value conditions.

While shares dropped sharply on the earnings miss, Hertz stock remains up approximately 60% year-to-date, boosted in part by renewed investor interest last month after Bill Ackman‘s Pershing Square Capital Management disclosed a significant stake in the company.

HTZ Price Action: Hertz shares were down 15.1% at $5.88 at the time of publication Tuesday, according to Benzinga Pro.

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