Hertz Global (Nasdaq: HTZ) shares soared over 36% on Tuesday after posting revenue of $2.5 billion (£1.9 billion) and earnings per diluted share of $0.42 (£0.32)—both positive for the first time in two years.
The earnings beat consensus estimates and could indicate that billionaire investor Bill Ackman’s bet on the beleaguered company is proving to be correct.
Since Q4 2024, Ackman’s Pershing Square has purchased over 15.2 million shares of Hertz for $52.2 million (£39.9 million), with an average buying price of $3.56 (£2.73) per share. As of Wednesday, his stake was worth $101.8 million (£77.9 million), implying profits of over 90% in a relatively short span.
Hertz’s Smart Fleet Purchase Decision
In an April post on social media platform X, Ackman suggested that used-car prices could rise due to new import tariffs.
‘Hertz owns a fleet of over 500,000 vehicles valued at approximately $12 billion,’ Ackman wrote. ‘A 10% increase in used car prices would equate to a $1.2 billion gain on its auto assets, roughly half of the company’s current market capitalisation.’
Hertz finalised its 2025 fleet purchases earlier this year under lucrative terms before the tariffs were imposed. This could benefit the company if it replaces current vehicles with newer models.
Ackman added that Hertz management’s efforts—including fleet rotation, increasing unit revenues, and lowering operating costs—will significantly boost profit margins over the coming years.
‘Hertz has already made meaningful progress in rotating out higher-cost vehicles that had temporarily elevated depreciation expenses, which should lower vehicle depreciation going forward,’ Ackman stated.
Following Ackman’s Strategy
Hertz announced that it had ‘strategically monetised its fleet’ by selling older models on the retail market. The company’s car sales rose 5.7% in 2025 compared to the first nine months of 2024.
Months ago, Hertz entered an agreement to sell thousands of used cars through Amazon Autos. Under its ‘Back-to-Basics’ strategy, the company upgraded its fleet with newer models.
‘Throughout this transformation, we’re rebuilding our foundation while sharpening our skills and capabilities, creating a new platform for growth,’ said Hertz CEO Gil West in the Q3 earnings press release. ‘Our progress is meaningful, our heads are down, but our eyes are on the horizon as we build a company that can thrive across the full spectrum of mobility.’
Newer cars will reduce the decline in asset values on the balance sheet and decrease service times across the fleet.
Hertz shares surged 56% earlier this year after Ackman announced that Pershing Square was building a position in the company.
The biggest surge was during the 2020 meme-stock rally. When the pandemic battered the car rental market in 2020, Hertz was $19 billion (£14.5 billion) in debt and filed for bankruptcy. Within days, the stock soared over 800% on a Reddit-driven surge before plummeting shortly after.
However, the latest rally could be linked to improving fundamentals, and it may be sustained if the company can maintain this momentum. Analysts are now watching closely to see if Hertz can sustain its recent profitability and operational improvements.
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Originally published on IBTimes UK
