Bill Ackman vs. Wall Street: Who's Right About the Stock That Doubled After the Billionaire Bought It?

Yahoo

07-05-2025

Key Points
Billionaire Bill Ackman has accumulated a stake in Hertz worth nearly 20%.
Of the 10 analysts covering Hertz, not one considers the car rental stock a buy.
Some may be eyeing Hertz's declining revenue and a wide loss in 2024.
10 stocks we like better than Hertz Global ›
Billionaire Bill Ackman is known for making big contrarian bets on Wall Street, including piling into Chipotle Mexican Grill when it was still reeling from the E. coli crisis, and shorting Herbalife on concerns about its business.
Now, Ackman is shaking up Wall Street again, taking a 19.8% stake in Hertz Global Holdings (NASDAQ: HTZ). Shares of the struggling car rental company soared on the news, jumping 126% over a two-day span on April 16-17 after Ackman revealed the news.
For Ackman, it was a classic contrarian purchase. Hertz had fallen 90% from when it reemerged from bankruptcy in 2021 before he bought it, and the stock is not getting much love on Wall Street either.
Of the 10 analysts covering it, not a single one rates it a buy. Six of them call the stock a hold, which is often seen as a euphemism for sell, and four called Hertz an outright sell, which is relatively uncommon on Wall Street.
So who's right about Hertz -- Ackman or the analysts? Let's take a look at Ackman's thesis for the stock, which he laid out on X.
Image source: Getty Images.
The bull case for Hertz, according to Bill Ackman
Ackman outlined several reasons why he believes Hertz can deliver an attractive return. First, he sees Hertz as an operating company with a highly leveraged portfolio of automobiles, and he believes its fleet of used cars is likely to gain value from tariffs that are expected to push up prices for both new and used cars.
Second, he sees the company's mistake with Tesla vehicles, which it overbought and found to be too expensive to maintain and repair, as mostly in the past.
Third, he believes that improving industry dynamics will lead to more rational competitive behavior, meaning that rental car companies will raise their prices or pull back incentives, much like what happened in the ride-sharing and food delivery industry with Uber, Lyft, and DoorDash.
Finally, he's confident in the new management team, led by CEO Gil West, and its turnaround plan, and sees the company's leveraged capital structure as boosting the potential for returns.
Ackman also called out privately held Enterprise, the industry leader that he believes has a profit margin above 20%, and said that Hertz has the potential to do the same.
What the numbers show
Hertz is clearly working on a turnaround, but its 2024 results were ugly. It reported a net loss of $2.9 billion on $9 billion in revenue, down 3.4% from the year before. In the fourth quarter, it lost $479 million on $2.04 billion in revenue.