Group 1: Meme-Stock Trend - The meme-stock phenomenon is resurging in 2025, with investors focusing on unprofitable companies for investment opportunities [1] - Among the Russell 3000 stocks, 10 out of 14 that have tripled since the market bottom on April 8 are unprofitable [1] - By late June, the 858 money-losing stocks in the index gained an average of 36%, outperforming profitable stocks [1] Group 2: Avis Budget Group - Avis Budget Group has seen a significant stock increase of 161% since April, driven by operational improvements and tariff-driven demand shifts [2][6] - In Q1, Avis reported a 4.7% year-over-year revenue decline to $2.43 billion but exceeded EBITDA expectations with a smaller loss of $93 million [6] - Q2 adjusted EBITDA is projected to exceed $200 million, supported by a focus on higher-margin rentals and better vehicle utilization [6] Group 3: Carvana - Carvana's stock has surged 108% since April, with Q1 revenue increasing by 38% to $4.2 billion and retail sales up 46% to nearly 134,000 vehicles [2][10] - The company achieved a net income of $373 million and a record adjusted EBITDA of $488 million in Q1, while operating with lower inventory and reduced costs [10] - Carvana's stock was up 73% for 2025, trading at $346, benefiting from the proposed 25% tariff on imported cars, which is expected to boost used-car demand [11]

Core Viewpoint - Hertz Global Holdings experienced a significant stock surge following billionaire Bill Ackman's announcement of a 19.8% stake in the company, which he believes is undervalued due to its leveraged portfolio and recent management changes [1][2]. Company Analysis - Ackman highlighted several factors that could lead to a substantial return on investment for Hertz, including improved competitive behavior in the car rental oligopoly, resolution of previous issues related to Tesla purchases, a new management team with a turnaround plan, and an attractive capital structure [2]. - Prior to Ackman's investment, Hertz's market capitalization was around $1 billion, and the company was not profitable, with analysts projecting a modest profit by 2026 [5]. - The car rental industry is characterized by high cyclicality, making it sensitive to economic downturns, which could impact Hertz negatively as travel demand shows signs of slowing [6][9]. Market Reaction - Following Ackman's announcement, Hertz's stock rose by 73% in April, indicating a strong market reaction to the news [2]. - However, there are concerns that the stock may have become overbought, as indicated by its pullback at the end of the month [4]. Future Outlook - The upcoming first-quarter earnings report on May 12 is critical for Hertz, as any disappointing results could lead to a significant decline in stock price [9]. - The company faces challenges from rising auto tariffs, which could increase depreciation expenses and further complicate its financial recovery [7].

Financial Data and Key Metrics Changes - Revenue for Q4 was just over $2 billion, representing a 7% year-over-year decrease largely driven by a decrease in volume [24] - Adjusted EBITDA for the quarter was a loss of $357 million [24] - Fleet utilization improved year-over-year for the first time in 2024, with a DPU (depreciation per unit) target of below $300 [25][32] Business Line Data and Key Metrics Changes - The fleet size was down 4% year-over-year in Q4, with a 7% reduction compared to the start of 2024 [18] - The company sold over 100,000 vehicles in Q4, significantly up from just over 30,000 in Q4 2023 [9] - The average fleet consisted of over 60% vehicles one year old or less by year-end 2024 [9] Market Data and Key Metrics Changes - Hertz serviced 154 million transaction days in 2024, with year-over-year utilization improving by 270 basis points from Q3 to Q4 [11] - Loyalty enrollments grew 18% year-over-year in Q4, indicating a positive trend in customer retention [21] Company Strategy and Development Direction - The company is focused on a "back to basics" roadmap anchored by three core financial pillars: fleet, revenue, and cost management [8] - A transformative fleet rotation strategy is underway, with a goal to complete it by year-end 2025 [9] - The company aims to enhance customer experience through improved service recovery and digital experiences [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged 2024 as a challenging year but expressed optimism about the foundational changes being implemented for long-term success [5] - The company expects to face a seasonal EBITDA loss in Q1 2025, with a gradual improvement throughout the year [31] - Management is confident in achieving a sub-$300 DPU by the end of 2025, supported by improved fleet management and sales strategies [40][44] Other Important Information - The company raised $500 million through the issuance of additional first lien senior secured notes due in 2029 to enhance liquidity [32] - Upcoming debt maturities are being actively planned for, with confidence in managing these obligations [33] Q&A Session Summary Question: What metrics should be used to gauge Hertz's operational progress? - Management highlighted DPU as a key metric, aiming for less than $300, along with utilization and NPS (Net Promoter Score) as critical indicators [40][42] Question: How should net DPU be expected to trend throughout the year? - Management indicated that net DPU would be inflated in Q1 but expected to decline through the year, aiming for sub-$300 by year-end [43][44] Question: What is the outlook for fleet size moving forward? - Management expects to maintain a smaller fleet while maximizing RPU (Revenue Per Unit) through improved demand capture strategies [45][46] Question: What is the medium or long-term margin target for the company? - Management suggested using North Star metrics, targeting RPU above $1,500 and DOE (Daily Operating Expense) in the low 30s [50][52] Question: How is the company addressing liquidity and cash considerations? - Management confirmed a strong liquidity position of $1.8 billion, with plans to manage cash flow through fleet rotation and operational improvements [67][70] Question: What avenues are being explored for vehicle disposals? - Management is focusing on increasing retail sales channels while reducing reliance on auctions, aiming for higher net margin sales [73][74] Question: What options are available for refinancing upcoming maturities? - Management expressed confidence in addressing refinancing needs, with ongoing discussions for the revolver due in the first half of the year [78][79]