Hertz Sinks 11% After-Hours As Carl Icahn Sells Stake At $1.8B Loss

Shares in troubled car rental company Hertz Global Holdings (HTZ) sunk a further 11% to $1.16 in Wednesday’s after-hours trading on the news that Carl Icahn has sold his Hertz stake at an apparent loss of about $1.8 billion.

Icahn divested 55.34M common shares for $39.8M, at a price of $0.72/ share on May 26, an SEC filing revealed. He previously owned a 39% stake in Hertz and had three representatives on the board.

The 84-year old hedge fund manager stated “I have been an investor and supporter of Hertz since 2014. Unfortunately because of Covid-19 which has caused an extremely rapid and substantial decrease in travel, Hertz has encountered major financial difficulties and I support the Board in their conclusion to file for bankruptcy protection.”

“Yesterday I sold my equity position at a significant loss, but this does not mean that I don’t continue to have faith in the future of Hertz. I believe that based on a plan of reorganization that includes new capital, Hertz will again become a great company. I intend to closely follow the Company’s reorganization and I look forward to assessing different opportunities to support Hertz in the future.”

Late on Friday Hertz filed for bankruptcy protection after the car rental firm failed to reach long-term agreements with creditors. The news sent shares down 36% to $1.82 in extended US trading.

Hertz is embarking on the financial reorganization as it sees “a prolonged travel and overall global economic recovery”. During the reorganization process, the company will maintain ordinary operations, continue to pay vendors and suppliers, pay its employees, and continue with its customer loyalty programs.

TipRanks data shows that three analysts in the past three months have cut Hertz stock to Sell from Hold, with a further analyst downgrading the stock to Hold. Overall, this gives Hertz a bearish Moderate Sell analyst consensus.

With shares trading down 92% on a year-to-date basis, the $3.33 average analyst price target indicates 154% upside potential from the current share price. (See Hertz stock analysis on TipRanks).