Why Hertz Stock Is Falling Back to Earth
Shares of Hertz (NYSE: HTZ), a vehicle rental company currently dealing with bankruptcy, are finally heading back down to earth, declining as much as 32% Thursday morning after a wild run-up in share price. Investors may finally be coming to grips with the fact that current shares are likely headed to zero. Making things worse, sobering comments from the Organization for Economic Cooperation and Development (OECD) dragged down broader markets Thursday morning.
Starting first with the comments from the OECD -- and getting to how this affects Hertz, Avis Budget Group (NASDAQ: CAR), and other transportation stocks in a moment -- the organization released its economic outlook with an unusual two-scenario report. One scenario shows COVID-19 continuing to recede, and the other shows the impact of a second wave later in the year -- the OECD's chief economist, Laurence Boone, noted that both scenarios seem equally likely at this point. In the first scenario, U.S. gross domestic product (GDP) declines 7.3% for 2020 and rebounds 4.1% in 2021. In the second scenario, U.S. GDP slides 8.5% in 2020 and rebounds only 1.9% in 2021. Also depressing for investors were predictions that the unemployment rate would still be in the high single digits in 2021, even in the best of scenarios.
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Source Fool.com
