Class Action Lawsuit against Hertz Global Holdings, Inc. (NASDAQ:HTZ)

A class action lawsuit has been filed against Hertz Global Holdings, Inc. (NASDAQ: HTZ) on May 31, 2024. The plaintiffs (shareholders) alleged that they purchased HTZ shares at artificially inflated prices between April 27, 2023 and April 24, 2024 (the lawsuit period) and are now seeking compensation for their financial losses. Investors who purchased Hertz Global shares during this period can click here to learn more about participating in the lawsuit.

Hertz Global Holdings operates a car rental business through its subsidiary, The Hertz Corporation. Hertz operates its business under various brands, namely Hertz, Dollar and Thrifty, in North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The company claims to be one of the largest global car rental companies and offers both internal combustion engine (ICE) vehicles and electric vehicles (EVs).

Hertz’s misleading claims

Plaintiffs allege that during the Class Period, Hertz and two of its current and/or former executive officers (Individual Defendants) deceived investors by repeatedly making false and misleading public statements about the Company’s business practices and prospects.

According to the lawsuit, the then-CEO (defendant) stated that the company was investing more heavily in technology and electrification to improve operations, expand ridesharing, and revitalize the brand to increase shareholder returns.

In addition, the company pointed out in a quarterly report that the car rental business is seasonal. Accordingly, Hertz increased its vehicle fleet and staff during times of high demand and reduced it during times of low demand.

In addition, Hertz announced in a press release on May 11, 2023 that it would add 6,000 rental electric vehicles to its fleet in Orlando. As part of the agreement with the City of Orlando, this move was made to expand the fleet for leisure, business and rideshare drivers.

This is how the truth came to light

The complaint alleges that the defendants failed to disclose truthful information in SEC filings and related materials about the financial impact of vehicle depreciation and demand for electric vehicle rentals.

The information became clear in a series of events that occurred between January 11, 2024, and April 25, 2024. Importantly, on April 25, Hertz released weaker-than-expected earnings per share (EPS) for the first quarter of fiscal 2024. The company reported an adjusted loss of $1.28 per share, well above the consensus loss of $0.43 per share. Additionally, the number compared unfavorably to the year-ago quarter’s adjusted earnings per share of $0.39.

The company noted that adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) turned negative due to a $588 million increase in vehicle depreciation ($339 per unit). The primary reason for the increased depreciation expense was cited as “a deterioration in estimated residual values ​​and disposal losses on internal combustion engine vehicles.” In addition, of the $339 per unit increase, $119 was due to electric vehicles for sale.

In particular, due to the above factors, HTZ shares have lost over 67% so far in 2024, resulting in massive losses in shareholder returns.

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