Hertz shares rose in premarket trading on Thursday after the car rental company reported second-quarter results that beat Wall Street’s expectations. This gave the stock a much-needed break after a tough period.
Hertz posted a loss of 11 cents per share on $2.4 billion in sales, which was better than the 24-cent loss analysts expected on sales of just under $2.3 billion, according to FactSet. A year ago, the company lost 29 cents per share on sales of just under $2.2 billion.
The stock jumped 17% in premarket trading, far outpacing the broader market futures.
Revenue per rental unit increased by 8% compared to last year. CEO Gil West said the results show the company is sticking to its strategy and building commercial strength, highlighting real progress as Hertz works to turn the business around.
These results are a welcome change after a tough year and could create trouble for short sellers. About 30% of Hertz shares available for trading have been borrowed and sold short by investors betting the stock will fall, which is about 10 times the market average. With so many betting against the stock, good news could force short sellers to buy back shares to cover their positions, which might push the stock even higher.
Recently, short sellers had been correct. Hertz shares had dropped 70% for the year before Thursday, and earnings estimates had fallen sharply in recent months. The stock fell hard on June 24 after the company warned that a weak used-car market would hurt second-quarter results, which is important since rental car companies depend on vehicle resale values.imately came in better than that warning suggested. Hertz reported second-quarter earnings before interest, taxes, depreciation and amortization of $81 million, at the high end of its prior guidance range.
Because the results were much better than expected, investors will probably see a strong positive move in the stock, though it’s not clear how big that move will be.
