Government Shutdown Boosts Car Rental Business
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Source: seekingalpha
- Surge in Rental Demand: The partial government shutdown has led to airport security delays, resulting in a 15% increase in search traffic to Hertz's rental website, with 33% of rentals now attributed to road trips, indicating a shift in consumer preference towards car rentals.
- Historical Trend Repeats: This spike in rental demand mirrors the situation during the last government shutdown in November, suggesting that consumers are more inclined to opt for road travel over air travel in similar circumstances, further driving growth in the rental market.
- Hertz Promotional Strategies: To assist travelers in avoiding airport congestion, Hertz recommends booking in neighborhoods, prepaying for fuel to lock in prices, and adding flight information when necessary to ensure availability during long airport delays and missed flights.
- Stock Price Surge: The increase in rental demand has driven up the stock prices of Hertz and Avis Budget Group, both achieving double-digit gains on Thursday, with Hertz's stock rising 26% over four days and Avis Budget Group's stock climbing 40%, reflecting market optimism towards the rental industry.
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Analyst Views on HTZ
Wall Street analysts forecast HTZ stock price to rise
3 Analyst Rating
0 Buy
2 Hold
1 Sell
Moderate Sell
Current: 4.600
Low
3.00
Averages
4.83
High
6.00
Current: 4.600
Low
3.00
Averages
4.83
High
6.00
About HTZ
Hertz Global Holdings, Inc. is a car rental and mobility solutions provider. The Company's subsidiaries and licensees operate the Hertz, Dollar, Thrifty and Firefly vehicle rental brands with more than 11,000 rental locations in 160 countries around the globe, as well as the Hertz Car Sales brand, which offers a range of used cars for sale online and at locations across the United States, and the Hertz 24/7 car sharing business in Europe. The Company's segments include Americas RAC and International RAC. Its Americas RAC segment includes rental of vehicles, as well as sales of vehicles and value-added services, in the United States, Canada, Latin America and the Caribbean. The Company's International RAC segment includes rental of vehicles, as well as sales of vehicles and value-added services, in locations other than the United States, Canada, Latin America and the Caribbean. The Company has franchisees and partners that operate rental locations under its brands.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Short-Term Risks: Despite the stock's rise, 23.5% of Avis Budget's float remains short-sold, which could trigger a short squeeze and lead to sharp price fluctuations, necessitating caution from investors.
- Market Volatility Expectations: With uncertainties in travel and economic conditions, Avis Budget is poised for more volatility catalysts ahead, advising investors to remain vigilant when considering investments.
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- Impact of Airport Chaos: As the partial government shutdown affects domestic airports, more travelers are opting for rental cars, with Hertz Global experiencing a roughly 15% surge in web traffic, reflecting consumers' adaptability in response to airport congestion.
- Notable Short Selling Risks: As of mid-March, 23.5% of Avis Budget's float was still sold short, which could trigger a short squeeze that drives the stock price sharply higher, while also facing risks from economic downturns or global unrest.
- Cautious Investor Sentiment: Analysts have noted that Avis Budget Group was not included in the current list of top investment stocks, suggesting that investors should be cautious when considering investments, especially in light of potential volatility factors ahead.
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