Hertz Global Holdings (HTZ) is back in the headlines, with its stock price doubling since last week. The catalyst? Bill Ackman’s Pershing Square Capital Management (PSH) surprised the markets by amassing a 19.8% stake in the struggling car rental giant.
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The bold move has investors buzzing, with talk of a short squeeze and sky-high price targets. HTZ stock is up 22.5% over the past five days alone. Some investors are concerned that Ackman is betting on a company weighed down by debt and past missteps, while others see a superb bargain investment that could turn HTZ’s fortunes around by the end of 2025. Given all the market buzz, volatility is in the air, so I prefer to stay neutral on HTZ for the time being.
Hertz Global (HTZ) price history over the past 5 days
Pershing Square’s Strategic Stake
Legendary investor Bill Ackman has a long-standing reputation for turning around beaten-down brands, and his recent stake in Hertz, which he began accumulating late last year, seems like another such play. Pershing Square’s initial $46.5 million acquisition of 12.7 million shares, revealed in an SEC filing last Wednesday, marked a 4.1% stake. But Ackman didn’t stop there. He quickly ramped up to 19.8% through a mixture of direct purchases and total return swaps, making Pershing the second-largest shareholder. It’s no wonder such an aggressive build propelled HTZ to more than double over the course of last week.
I think the stake in Hertz follows the classic Ackman’s contrarian playbook: betting big on companies at a depressed valuation with turnaround potential. He views Hertz as a dual play between its operating rental business and its leveraged portfolio of 500,000 vehicles, worth $12 billion.
A small Hertz car rental branch in Tampa, Florida
With the new tariffs potentially boosting used-car prices by 10%, Ackman estimates a $1.2 billion gain on Hertz’s fleet, equivalent to half its market cap. This compelling thesis is already driving investor enthusiasm, given that the stock’s market cap is still just $2.4 billion, even after its recent gains.
A Vanishing Float
Now, here’s where things get interesting. Hertz’s shareholder base was already loaded with heavyweights. In fact, Knighthead Capital Management already held a staggering ~59% of the company (about 181.5 million of the 307 million outstanding shares) before Ackman’s entry. Knighthead, a distressed-debt specialist, amassed its stake post-Hertz’s 2020 bankruptcy, betting on a restructuring-led rebound. Combined with Pershing’s 60.8 million shares and Vanguard’s 12.19 million, most of Hertz’s shares are now held by three major players, vanishing the pubic float.
Hertz Global (HTZ) Ownership Overview
Hertz Global (HTZ) Recent Insider Trading & Hedge Fund Trading Activity
Maybe Vanguard doesn’t really count since its ETFs can sell shares. However, assuming Kingthead and Pershing Square hold their shares tightly, most outstanding shares have been thrown out of the market. This type of setup makes HTZ super sensitive to buying pressure. With so few shares out there, even a small wave of demand can move the stock significantly. It’s a recipe for volatility and could lead to wild price swings.
Short Squeeze on the Horizon
This brings us to how massive gains can be made with HTZ stock. Given the low float and high sensitivity to buying, Hertz’s rally can easily trigger a short squeeze. Before Ackman’s disclosure, 44% of HTZ’s float was shorted, with borrowing costs spiking as shares grew scarce. When Pershing’s stake hit the news, HTZ vaulted from under $5 to an intraday high of $8.74 last Thursday, as shorts scrambled to exit. The reduced float, now a mere 75 million shares, intensifies this dynamic, as fewer shares magnify the impact of buy orders.
If retail investors, inspired by Ackman’s $30 price target for 2029, pile in, the squeeze could really escalate. The counterargument to the bullish case is that Hertz posted a $2.86 billion loss last year, while its large debt load looms as a risk, potentially capping gains once the frenzy cools. Still, for now, the tight float and heavy short interest keep the squeeze narrative alive, with every uptick drawing more eyes to HTZ’s wild ride.
Can Ackman’s $30 Vision Materialize?
Is Ackman’s $30 target realistic? It depends on Hertz hitting optimistic operational targets under CEO Gil West: $1,500 in revenue per unit, $30 in daily operating costs, $300 in depreciation per unit, and 85% fleet utilization. He also pitches a transformative Uber partnership, utilizing Hertz’s 11,200 locations to manage self-driving fleets, leveraging his stake in Uber (UBER).
Hertz Global (HTZ) revenue, earnings and profit margin history
This move could lock in Hertz’s spot at the top of the U.S. rental market, which is run by just three big players, and help drive higher profits. But the road’s still rough. Hertz is sitting on $17.8 billion in debt coming due by 2028–2029, and that’s no small issue. Then there’s the whole Tesla mess, as overpaying for that fleet didn’t help their reputation. With Ackman’s existing track record on turnarounds and a possible boost from tariffs, his now-bold vision may not be that far-fetched after all. That is, of course, assuming the West can handle the rough patches ahead in the first place.
Is Hertz a Good Stock to Buy Now?
Wall Street analysts have been slow to appreciate the recent news. HTZ stock currently has two Hold and two Sell ratings, acquired over the past three months, forming a Moderate Sell consensus. HTZ stock carries an average price target of $2.93, which implies a 66% downside potential from current price levels. Ackman’s buy-in has raised pulses, although Wall St is apprehensive.
To dare is to do, and that’s precisely what one of the world’s most influential hedge fund managers, Bill Ackman, has done. Bill Ackman’s Hertz gamble and Knighthead’s majority stake have transformed HTZ into a market lightning rod. The drastically reduced float is poised to amplify every market move, potentially fueling a short-squeeze frenzy.
Still, Ackman’s $30 target requires Hertz to meet several conditions, while the company’s debt and operational hurdles loom. This will undoubtedly be a thrilling ride, including both the potential for blockbuster gains and the sobering reality of a potential rush for the exits when results disappoint. In any case, it’s too speculative a ride for me, so I am neutral on HTZ stock at its current levels.
