Hertz warns of tighter year-end cash cushion, shares sink

What happened

Hertz told investors it now sees year-end liquidity landing near $800 million instead of around $1 billion, according to Chief Financial Officer Scott Haralson on Thursday's earnings call. As context, the company closed September with $531 million of cash and equivalents, far short of the $984.5 million analysts had penciled in.

The guidance followed results that missed on adjusted earnings per share while revenue edged past estimates. Shares tumbled as much as 27% at 1:30 p.m. in New York, with one caption noting the stock fell back below $2 and another pointing out the slide since a June profit warning.

Why the outlook tightened

Haralson said the liquidity view includes the payoff of $200 million in bonds maturing in early December. To shore up liquidity, the company plans property sale-leasebacks, a modest reduction in vehicle count, and potentially a smoother pacing of fleet investments over the year to lessen pressure on the balance sheet.

"Taking these factors together, we believe we have sufficient liquidity to operate the business while continuing to execute our strategic priorities," Haralson said.

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The EV bet still stings

Hertz is still digging out from an ill-timed electric-vehicle push around its 2021 initial public offering. After it spent billions loading up on EVs, Tesla cut prices across its lineup, pulling down resale values on Hertz's lots. The company also faced higher operating and repair costs before ultimately opting to dispose of a large portion of its EV fleet.

Back in November 2021, Hertz's market value topped more than $16 billion as it finalized an order for 100,000 Teslas. Since that peak, the shares have fallen 95%.

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