Hertz Cuts Its Forecast and Taps the Market for Cash — Can a $2 Stock Survive $20 Billion in Debt?

Shares of Hertz shifted sharply after the rental-car giant slashed its second-quarter earnings outlook and launched a double capital raise — only to bounce +7% to $1.97 today as bargain hunters pile in. The real question: does the rebound reflect value, or just volatility in a stock that's down 60% year-to-date?

Used-Car Losses Are Eating the Core Business Alive. Hertz lowered its Q2 adjusted EBITDA forecast — a measure of operating profit before interest and accounting adjustments — to a range of $50 million to $80 million. The culprit: losses on vehicle sales in May wiped out gains from April, driving up the cost of owning each car in the fleet.

Net depreciation per unit per month — the rate at which each car loses value — is now expected to hit roughly $300.

Morgan Stanley slashed its full-year 2026 EBITDA estimate by 40%, to $213 million, reflecting a margin of just 2.4%. When your cars lose value faster than you can rent them out, every month is a treadmill.

A $450 Million Capital Raise Buys Time — and Dilutes Shareholders. Hertz priced an upsized $350 million offering of 6.75% exchangeable notes due 2030 — up from the initially announced $300 million — with an option for another $50 million.

Separately, it launched a $100 million common stock offering.

The notes convert into shares at roughly $3.58 apiece — nearly double today's price, but a clear ceiling on equity upside if shares recover. Management is lending about 37 million shares tied to the equity deal to support hedging for note buyers, adding significant new supply.

The Balance Sheet Is Already Stretched to Its Limits. Hertz carries approximately $20.6 billion in long-term debt on $23.3 billion in total assets, with negative shareholder equity of roughly -$786 million.

Q1 revenue was $2.0 billion, but the company still posted a net loss of about $333 million.

Free cash flow was slightly negative , leaving no cushion for further used-car deterioration.

The Rental Side Is Fine — and That's Not Enough. Fleet size, revenue, revenue per day, and rental days are all expected to meet or slightly exceed prior guidance. The demand story is intact. But Morgan Stanley expects elevated per-unit depreciation to persist through Q3 and Q4 , meaning the profit squeeze isn't going away when summer ends. With a market cap hovering near $580 million against that mountain of debt, Hertz's turnaround has almost no room for error.