Hertz Global Holdings Inc. crashed after the company reported a worse-than-expected loss stemming from the rental-car company’s risky bet on electric vehicles and heavy depreciation costs that have pummeled earnings for the past year.
The company posted an adjusted loss of 68 cents a share in the third quarter, more than the 46-cent average deficit estimated by analysts. Hertz also took a $1 billion non-cash impairment charge during the quarter, largely due to the lower value of the battery-electric and gas-powered vehicles in its fleet, the company said in a statement on Tuesday.
Hertz shares fell as much as 12%. The stock had declined 68% this year through Monday’s close.
The results mark Hertz’s fourth-straight quarterly loss, highlighting the toll of the company’s failed strategy to electrify its fleet with EVs from Tesla Inc. New Chief Executive Officer Gil West has been working to fix the damage by selling tens of thousands of those cars along with gasoline-powered models it bought at elevated prices.
The electric vehicle push tipped the company into crisis starting in the second half of 2023, when Tesla EV prices plummeted and left the company with cars worth far less than it could fetch in the resale market. Repair costs were also higher than expected and customers leased them at lower rates compared to conventional vehicles.
Source: Bloomberg, Yahoo Finance
