By Hertz shares plunged as much as 12% on Tuesday after the company turned in its fourth quarterly loss in a row. The earnings report highlighted the car-rental giant’s inability to shake off a failed bet on Tesla vehicles.
Hertz lost 68 cents per share in the third quarter, exceeding consensus expectations for a 46-cent loss. The declining residual value of its car fleet also cost Hertz a $1 billion non-cash impairment charge during the period.
Although Hertz stock tumbled early, it stabilized mid-day, trading roughly 3% higher at $3.48 as of 1:05 p.m. ET in New York.
According to the company’s latest press release, vehicle depreciation has jumped significantly at a time when the firm is trying to rotate out high-capital-cost vehicles, such as Tesla’s EVs.
The rental giant once planned to make 25% of its fleet electric by the end of 2024 and, three years prior, pledged to purchase 100,000 Teslas to meet this goal.
That’s since changed. Hertz has since decided on downsizing its EV fleet by 30,000 vehicles, having discovered that these cars depreciate quickly and come with high repair costs. Renters also appeared indifferent toward electric rentals, with customers requesting EVs less than expected.
That has cost the company quarterly losses across 2024. So far, Hertz’s stock is down nearly 69% year-to-date.
In the third quarter, revenue dropped 5% to $2.6 billion. Vehicle depreciation rose 89% to $547 a vehicle per month. But according to Bloomberg, CEO Gil West told analysts that depreciation will normalize to about $300 in the future.
