Core Viewpoint - Bill Ackman's Pershing Square Capital Management has acquired a 19.8% stake in Hertz, signaling a potential turnaround for the struggling car rental company, which has faced significant challenges since the COVID-19 pandemic [2][3][5]. Company Performance - Hertz filed for bankruptcy protection in May 2020 due to plummeting demand during the pandemic and has been involved in a legal dispute over a $300 million payout [3]. - The company reported a nearly $2.9 billion loss in 2024, largely attributed to a poor investment in 100,000 Tesla vehicles, which were not well-received by renters [4]. - Hertz's operational metrics showed a decline, with a depreciation per unit (DPU) of $422, down 16% year over year, and revenue per unit (RPU) of $1,376, down 1% year over year [7]. Investment Thesis - Ackman believes in a turnaround under new CEO Gil West, citing potential improvements in operations and a more rational competitive landscape [5]. - The company owns a fleet of 500,000 vehicles valued at $12 billion, and a 10% increase in used-car prices could yield a $1.2 billion gain, nearly half of Hertz's market cap [6]. - Ackman projects that Hertz could generate $2 billion in adjusted EBITDA by 2029, with a potential share price of $30, representing a 306% gain from current levels of $7.38 [7]. Analyst Sentiment - Despite Ackman's bullish outlook, most analysts maintain a bearish stance, with two recommending hold and two suggesting sell, leading to an average price target of $2.93, indicating significant downside [8]. - Bank of America analyst John Babcock noted that Hertz may need to raise about $500 million, maintaining an underperform rating with a $2.70 price target [9]. Market Dynamics - The potential for meme stock trading activity around Hertz is noted, as it was previously considered a meme stock before GameStop [11]. - The significant stock price movement following Ackman's stake acquisition may have been exaggerated, suggesting caution in investment decisions [12].