Shares of Hertz Global Holdings plunged on Wednesday after the car-rental company warned that second-quarter earnings are tracking toward the lower end of its guidance range, citing unexpected weakness in the used-car market.
The stock sank more than 38% during trading and was on track for its largest-ever single-day percentage decline and its lowest close since March 2025, according to Dow Jones Market Data.
Hertz said it expects second-quarter adjusted corporate earnings before interest, taxes, depreciation and amortization (EBITDA) of between $50 million and $80 million.
While the forecast remains within its previously projected range, it is expected to land near the lower end of guidance and below Wall Street expectations.
Analysts surveyed by LSEG had projected second-quarter EBITDA of $79.11 million on average.
The company attributed the weaker outlook to softer-than-expected conditions in the used-car market, which increased depreciation costs and weighed on profitability.
Used-car weakness raises depreciation costs
Hertz said “unexpected” softness in the used-car market led it to record losses on vehicle sales in May after generating gains in April.
The company now expects net depreciation per vehicle per month to be approximately $300 during the second quarter.
Last month, Hertz had projected depreciation to come in well below that level, supported by anticipated gains from second-quarter vehicle sales.
In a securities filing, Hertz said the slowdown in the used-car market had driven up depreciation expenses, creating a significant headwind for earnings.
The company noted that fleet size, revenue, rental days, and revenue per day are expected to meet or slightly exceed prior expectations, supported by healthy demand and stronger-than-anticipated capacity utilization.
However, the losses on vehicle dispositions have offset those positives and pressured profitability.
The update comes as the broader used-car market faces challenges despite higher US tariffs increasing the cost of new vehicles and pushing some consumers toward pre-owned cars.
Macroeconomic pressures and strained household budgets have made it difficult for used-vehicle companies to maintain margins.
Financing plans add pressure to shares
Adding to investor concerns, Hertz announced plans for a $100 million public stock offering alongside a $300 million offering of exchangeable senior first-lien secured payment-in-kind (PIK) notes due 2030.
The company said proceeds from the note offering will be used for general corporate purposes, including the potential repayment of outstanding debt.
Under the arrangement, Hertz will lend the newly issued shares to underwriter J.P. Morgan Securities, allowing investors to establish short positions to hedge purchases of the notes.
Hertz will receive only a nominal lending fee from the stock transaction and no direct proceeds from the share sale itself.
The notes will pay interest through a combination of cash and payment-in-kind interest and may be exchanged for cash, Hertz common stock, or a combination of both at the company’s election.
The number of shares issuable upon exchange is capped at 19.9% of outstanding shares unless shareholders approve a larger issuance.
Wednesday’s selloff extended a difficult period for Hertz shares.
Including the latest losses, the stock has fallen roughly 28% this year and nearly 50% over the past 12 months.
The company has spent the past year streamlining operations, refreshing its fleet, and working to improve its financial position.
Hertz also sought to rebuild investor confidence through partnerships, including agreements announced in April with Uber Technologies to support the ride-hailing company’s robotaxi ambitions.
However, persistent challenges in the used-car market and concerns about profitability continue to weigh on investor sentiment.
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