The Hertz Side of the Tesla Deal

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Timur Markowitz

Hertz, who recently filed for bankruptcy, rushed into a rash agreement with Tesla.

Tesla cars: expensive, attractive, well-built, and eco-friendly. 

And now they might be easier to buy than ever. Recently, an announcement came stating that Hertz (a car rental company) and Tesla had an upcoming deal that would sell 100,000 cars. This caused Tesla’s stock price to increase by approximately 8.5%; later, when Elon Musk stated that the deal had yet to be signed, its stock dropped almost 4%. Later, Mark Fields, Hertz CEO, specified that Teslas would be arriving at Hertz sites and available for rental later this month. According to Yahoo Finance, the stock peaked at $1209.47 over the last few weeks, climaxing at 3:45 on November first.    

  A few months ago, Hertz filed for Chapter 11 bankruptcy, yet now they have quickly elected to buy 100,000 cars. This is also a quick decision for Mark Fields to make, who is not only an interim CEO but the third the company’s had in seventeen months. The stock price has additionally exploded, as it’s risen from $0.56 to $28 in just a few months. 

  Tesla then dropped by 16%, which could be partially attributed to Musk’s cousin Kimbal Musk selling over $100 million worth of stocks. The decision to buy 100,000 Teslas seems far too premature, given the current state of Hertz. 

  Hertz is a formerly bankrupt company that has come back from a stock price of $0.56 a share with their third CEO in under two years, yet they have now elected to make a $4.4 billion dollar deal. This seems like a rash decision made by a company that may not be around in a few years, as most companies that have just escaped bankruptcy do not celebrate through obtaining $4.4 billion dollars of debt. This deal would be incredible for Tesla; however for Hertz, this is a reckless move by an unproven CEO that the company seems unprepared for.