Hertz Global Holdings Inc.’s stock tumbled 6% early Tuesday, following the announcement of a wider-than-expected fourth-quarter loss. The car rental company reported a net loss of $348 million, or $1.14 per share, compared to income of $116 million, or a loss of 1 cent per share, in the same period last year. The adjusted per-share loss came in at $1.36, exceeding the FactSet consensus of a $1.05 loss per share.
Revenue Growth Despite Challenges
Despite facing headwinds related to their electric vehicle (EV) fleet and other costs, Hertz managed to achieve solid revenue growth. Revenue rose to $2.184 billion from $2.035 billion, surpassing the FactSet consensus of $2.154 billion. CEO Stephen Scherr noted that solid demand and a stable rate environment were key factors contributing to the company’s performance.
Addressing Challenges
To combat the challenges faced by their EV fleet, Hertz announced in January its decision to sell approximately 20,000 electric vehicles, which accounts for about one-third of their total EV fleet. This strategic move aims to better align supply with expected demand for EVs, allowing Hertz to reduce lower-margin rentals and minimize expenses associated with EV damage repairs. Repairing EVs after a crash requires specialized tools, parts, and knowledge, making it more time-consuming and costly compared to traditional gas-powered vehicles.
Financial Toll and Stock Performance
Incurring charges of $245 million during the quarter to cover depreciation costs related to their EV strategy has had a noticeable impact on Hertz’s financials. As a result, their stock has seen a significant decline of 54% over the past 12 months, while the S&P 500 has experienced a gain of 20%.