(Bloomberg) – Shares of Hertz Global Holdings Inc. rocked sharply in their first session since the company emerged from bankruptcy on Wednesday.
The stock, which resumed over-the-counter trading under a new symbol “HTZZ,” rebounded Thursday between massive gains and losses before closing 23% higher at $ 26.99. It opened at $ 22 and almost immediately jumped over 50% to $ 35 before changing direction and dropping to $ 16 and then rising again.
Volatility is nothing new for Hertz, as the stock has been on a wild ride since the company filed for bankruptcy a year ago and its trading on the New York Stock Exchange was suspended in October.
Many investors are eager to see when stocks will be listed on a formal exchange, which would mean better access to capital, more liquidity and increased accountability. A spokeswoman for Hertz declined to comment on the listing plans.
Shortage of vehicles
The stock had traded over-the-counter under the ticker symbol “HTZGQ” for the past eight months, as the stock skyrocketed from penny stock status. Hertz rose more than 500% in the first half of 2021, with investors betting on the company’s successful rebound from bankruptcy.
Hertz’s comeback couldn’t have come at a better time. Americans are getting ready to take July 4th vacation trips, and the cost of car rentals is at staggering levels. The company could be held back by a shortage of available vehicles like the rest of the industry, but the demand for rentals is suppressed.
Hertz’s boom in the past year has been largely attributed to retail investors, who have recently propelled various pockets of the stock market. A group of amateur stock pickers have placed plenty of risky bets on the company despite filing for bankruptcy in May 2020, a trend that intrigued Wall Street pros last summer.
The company’s exit from bankruptcy comes at a time when amateur trading has become completely mainstream, with Morgan Stanley strategists even suggesting that Wall Street pros follow their smaller peers. Trading in so-called memes stocks is expected to continue to grip the market as business executives and investors adjust to the new normal.
A basket of 37 companies whose savage volatility forced Robinhood to impose trade restrictions in January has nearly doubled this year, posting gains more than six times the return of the S&P 500.
For bondholders, Hertz’s exit from bankruptcy has not been so easy.
A dispute between the noteholders and the company has not been resolved by the reorganization plan implemented by Hertz this week: should the company pay a redemption price for the reimbursement of the company notes under restructuring.
A trustee for the noteholders requires approximately $ 272 million. A U.S. bankruptcy judge will rule on the matter at a later date.
(Updates share movement in the first two paragraphs)
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