Hertz Global stock posts gains despite steep Q4 loss
Hertz (HTZ) posted a larger-than-forecasted loss in the fourth quarter, weighed down by the trimming down of its EV fleet.
Yahoo Finance's Pras Subramanian breaks down the details.
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Editor's note: This article was written by Angel Smith
Video Transcript
JULIE HYMAN: Shares of Hertz bouncing back from a record low earlier today. The car rental company reported a wider than expected fourth quarter loss related to its electric vehicle fleet. With more, we're joined by Yahoo Finance's Pras Subramanian. Pras, speaking of Tesla--
[CHUCKLES]
--what can you tell us about Hertz?
PRAS SUBRAMANIAN: Yeah. You know, Hertz, they bet big on Tesla. And now they're sort of suffering from that big sort of buy. Back in 2021, they had a big-- big marketing campaign, Tom Brady going all in on EVs. And now they're-- they're backtracking here because of the fact that they've suffered really steep repair costs for these cars. When they do get into accidents, they're expensive to repair.
The biggest thing, I think, is the residual value losses in the fleet. So a big part of their business is selling off those cars after a few years. And if you're suffering huge losses in terms of value, they have to stem that. And they decided Stephen Scherr, the CEO, was like, we need to do this now.
Sold about a third of their EV fleet, 20,000 Teslas. Said that they might have to do more if it warrants it. And you know, like I said, it's a-- it's a kind of a fall from grace from the once big bet on EVs to now. They still want to-- they still want to rent them out in certain markets where supply and demand are matched. And I think it sort of speaking to where we are as a country with EV adoption, where certain parts of the country are into it and some parts aren't.
JOSH LIPTON: And another big name after the bell here, Pras, Ford. Reporting results, what do you got to look out there? What's the focus?
PRAS SUBRAMANIAN: Yeah, three big things I think. Number one, profit outlook. We saw GM really have a strong sort of-- they basically reinstated their pre-UAW 2023 strike outlook for adjusted EBITDA. So we'll see Ford will-- will do that. We're looking for a number around $11 to $12 billion there in full year EBITDA.
Looking at their EV game plan, they pushed back about $12 billion of spending last year. Are they going to keep doing that? Are they going to pull some of that forward? What do they see there with EV demand and that sort of thing? And I spoke to Jim Farley about a month ago. And he said that he thinks that growth is still happening, just a bit slower.
And finally, the hybrid pivot. They talk about how they're going to make every car a hybrid if they can, et cetera. That's what they want to do. They want to have offer you gas-powered, hybrid, EV. The only issue is that they just killed the Explorer Hybrid because it wasn't that efficient. So you kind of got to make it work. It's got to make sense for the hybrid powertrain to work in the car and all that sort of thing. So we'll hear more about what they-- how they intend to do that.
JULIE HYMAN: Great roadmap. Thanks, Pras.
JOSH LIPTON: All right, we'll be watching. Thank you, Pras.
PRAS SUBRAMANIAN: Thanks.
