Hertz shares traded below its offering price during its debut on the Nasdaq. On Tuesday, the company shares fell 19.8% to $26.17 following its re-IPO, after initially pricing at $29.
Hertz’s Pink Sheets closing price on Monday was $32.62. Hertz Warrants (HTZWW) closed at $16.95, down 18.5%.
Until the offering, only 3% of Hertz’ 473 million shares were available to the public. As part of the bankruptcy restructuring, the company issued 14 million shares to former shareholders.
Securities and Exchange Commission Rule 144 restricted the remaining shares, which were sold primarily to institutional investors. They exchanged inter-institutionally on Wall Street trading desks.
Subscribers may exercise the over-allotment option for 6.7 million shares, increasing Hertz’s public float to approximately 55 million shares, or over 10% of outstanding shares.
Hertz’s bankruptcy exit has culminated in this deal. The company sold shares to investors in the restructuring at $10 per share.
The company reported record third-quarter earnings of $860 million before interest, taxes, depreciation and amortization (Ebitda). It expects Ebitda for 2021 to rise to $2 billion to $2.1 billion, compared to $649 million in 2019.
Comparatively, Avis shares dropped 6.7 percent to $273.33 on Tuesday.
Elon Musk questioned the Tesla-Hertz agreement.
Hertz has announced a $4 billion deal to buy 100,000 Tesla automobiles, an agreement to provide Teslas to Uber Technologies (UBER) drivers.
Nevertheless, Elon Musk questioned the legitimacy of the deal on Twitter a few moments before Hertz relisted, insisting that nothing was signed. Furthermore, he stated that Hertz would not benefit from different prices with that order.
Hertz had $1.2 billion in net cash before the stock offering, not including about $7 billion in asset-backed securities. By the end of the year, Hertz plans to offer to repurchase $1.5 billion of preferred stock held by Apollo Global Management (APO). Repurchased preferred shares will fetch a premium of 30%.