Hertz Shares Crash 41% After Debt Plan and Profit Warning

Hertz Global Holdings stock plunged 41% on June 24, 2026—the steepest drop since its 2021 IPO—after the car-rental giant warned of earnings pressure and unveiled a $400 million financing package. The company plans to issue $300 million in convertible payment-in-kind (PIK) notes and $100 million in new shares, with the latter designed to be shorted by note buyers as a hedge. Proceeds from the notes will be used to repay existing debt, but Hertz also flagged that weak used-car prices are squeezing its depreciation costs, pushing second-quarter adjusted EBITDA to $80 million or less—below analyst expectations. The unusual financing structure, which includes shares issued specifically to facilitate short selling, underscores the company’s urgency. JPMorgan Securities, an underwriter for both the stock offering and the notes, will borrow and distribute the new shares. Hertz’s existing float is already heavily shorted, and institutional investors hold a large portion of its stock, limiting available shares for shorting. The convertible debt route is cheaper than high-yield bonds, and the PIK structure lets Hertz defer cash coupon payments. Analysts warn the $100 million share issuance—expected to total over 25 million shares, or 21% of the float—will be significantly dilutive. The profit warning follows a year of cost-cutting and fleet modernization aimed at reducing depreciation losses and returning to positive earnings in 2026.