Shares are up 400% since the rental car company parked itself in bankruptcy court. Now it wants to sell more stock.
Shares of the sputtering rental car company Hertz, which filled for bankruptcy protection last month, rose as much as 40% Friday to $3 on news it wants to sell investors nearly 250 million additional shares on top of the 150 million available now. And that’s just latest spectacular rise in the struggling company’s stock.
Shares are up a staggering 400% since May 26, the first trading day after Hertz drove into bankruptcy court with $19 billion in debt and just $1 billion in cash on hand. The overall stock market is up just 0.5% in the same time.
This is not how the stock market is supposed to work.
Numerous market watchers are pointing to Hertz’s stock spike as the latest sign of growing investor irrationality in the wake of the spread of the coronavirus. Economist Paul Krugman said the Hertz stock sale reinforced the idea that the stock market was in some kind of bubble.
Earlier this week, the S&P 500-stock index was up as much as 43% from the U. S. market’s mid-March lows, even as America’s unemployment rate climbed and much of the economy remained closed. The technology-heavy Nasdaq composite hit an all time high.
Companies that have seen their stock prices reach new heights include electric auto company Tesla, with shares at $1,000 this week, making it the most valuable car company in the world. Tesla, founded in 2003, has yet to deliver a profitable year.
On Thursday, though, a rise in the number of coronavirus cases in states not previously hit hard by the pandemic caused the Dow Jones Industrial Average index to drop 1,800 points.
