Car Rental Company Hertz Shifts Gears: Plans To Sell 20,000 EVs From US Fleet, Reinvesting In Traditional Cars For Enhanced EBITDA
Portfolio Pulse from Shivani Kumaresan
Hertz Global Holdings, Inc (NASDAQ:HTZ) plans to sell about 20,000 EVs from its U.S. fleet, which is one-third of its global EV fleet. The sale, starting in December 2023 and continuing through 2024, aims to balance EV supply with demand, reduce lower margin rentals, and cut damage expenses. Hertz will reinvest in ICE vehicles to meet customer demand. The company expects an additional $245 million in depreciation expenses in Q4 2023 due to the EV sale. However, the fleet change is not anticipated to materially impact its asset-backed securitization facilities. Hertz projects an improvement in Adjusted Corporate EBITDA and an increase in free cash flow by $250-300 million over 2024 and 2025. Q4 2023 revenue is expected to be $2.10-$2.20 billion. HTZ stock dropped 5.19% to $8.86 following the announcement.
January 11, 2024 | 4:06 pm
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Hertz plans to sell 20,000 EVs to rebalance its fleet and invest in ICE vehicles, expecting to improve EBITDA and free cash flow. The stock fell 5.19% after the announcement.
The news of selling a significant portion of EVs and incurring additional depreciation expenses may concern investors about the company's direction and profitability in the EV market, leading to the stock price drop. However, the anticipated improvement in EBITDA and free cash flow could be positive in the longer term, but the immediate market reaction is negative.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100