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Hertz Stock Trading Halted

Normally, I like to break posts up for you here on Stock Market Daily, so I don’t talk about the same thing everyday and bore you to death.

Because I talked about Hertz again yesterday in its ongoing bankruptcy saga… Today, I’d usually talk about another topic to break things up.

I can’t do that today though.

Because some more major news broke on Hertz that I need to tell you about before we get back to talking about other topics.

If you want to catch up on all the news about Hertz over the last several weeks you can do so by reading the following articles.

Hertz Bankruptcy and The Potential Winners and Losers

Hertz Stock Up 888% In 10 Days – Should You Buy In?

Hertz Shares Worthless – According To Its Own Filings

This gets you caught up to yesterday’s events, so make sure you go back and read those for context on my thoughts today.

Apparently, someone saw our and other financial sites reporting on Hertz at the Securities and Exchange Commission (SEC)… Finally.

Because today on June 17th, 2020 the SEC put a halt to trading of Hertz shares “pending news.”

When the SEC halts a company’s shares “pending news” that news is almost never good for the company whose shares were halted.

As of this writing the SEC hasn’t talked about this “news” yet… But according to reports the SEC now has “concerns” about the proposed stock sale by Hertz of up to $1 billion in stock.

As I said above… Finally.

For weeks, there were rumors Hertz planned to sell new stock to help it raise cash while it goes through bankruptcy.

And just a few days ago these rumors were confirmed when Hertz announced it received authorization via the bankruptcy judge in Delaware to sell up to $1 billion in new stock.

In yesterday’s, article – Hertz Shares Worthless – I said this was disgusting for several reasons.

Here’s an excerpt from yesterday’s article that I’ve cut down for brevity sake… If you want to read the full article use the link above.

The text below starts with a direct quote from Hertz own recent filing and then goes into my commentary on the situation.

Hertz would include disclosure in any prospectus used to offer common stock highlighting that an investment in Hertz’s common stock entails significant risks, including the risk that the common stock could ultimately be worthless.

Anyone who buys these newly issued shares are likely to lose all their money shortly afterward.

This is disgusting.

Hertz is issuing up to $1 billion in shares to keep the company alive… Even when they know the value of these shares are most likely going to $0 when the company exits bankruptcy.

Let’s go through a quick example of why.

Person A wants to buy these new shares because it thinks the shares are cheap.

When Person A buys the shares, that money goes to Hertz. In exchange Person A get ownership in stock of the company.

But, in a matter of weeks or months when Hertz exits bankruptcy its near 100% certain that these “old” shares will be worthless. And almost a 100% chance Person A will have wasted all their money.

Stay away from Hertz stock and this new share offering. Because you’ll be setting your money on fire if you buy in.

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That’s what I wrote yesterday, but anyone who knows how to read financial statements and analyze a balance sheet can see this…

It only took me 20 minutes of work tops to figure out that Hertz shares are almost certain to be worth $0 when the company exits bankruptcy.

And I go into great detail as to why Hertz in the Hertz Stock Up 888% In 10 Days article linked above.

But it takes reporting by us and various other media outlets for the SEC to get involved?

This shouldn’t be the case… The SEC’s #1 job is to protect shareholders.

Here’s the SEC mission statement directly from its site…

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

But how are we to trust that they’re doing this on a regular basis if they can’t even protect shareholders from a bankrupt company… One that plans to issue new stock that they themselves state in their own filings “could” be worthless?

That’s why we at Stock Market Daily are here.

To help keep you informed in these crazy times we’re living in today, so you can continue building your wealth safely.

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Editor’s Note As This Was Getting Ready To Publish

News broke later in the day that Hertz decided to pull its proposed stock offering “after discussions with the SEC.”

This sale could still happen because further along in the release it says the deal is off for now until the SEC reviews the Hertz prospectus.

I bet the SEC won’t like what they see. And at this point I highly doubt this stock sale in anything close to its current form happens.

As always, I’ll keep you updated on any breaking news in this situation.

 

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