We use cookies on our website.
Some of them are necessary for the functioning of the site, but you can decide about others.
Hertz Wins Over Ackman in Bet Tariffs Will Raise Value of Cars
Bill Ackman's investment firm, Pershing Square Capital Management, has acquired a nearly 20% stake in Hertz Global Holdings, betting on a potential turnaround for the rental car company and the anticipated rise in vehicle values due to tariffs on auto imports. Ackman initiated this investment strategy last year and now holds 19.8% of Hertz, leveraging both direct share ownership and total return swaps. He believes Hertz can recover from its earlier electric vehicle ventures and take advantage of an increase in used car prices prompted by President Trump's tariffs, which are expected to impact the market significantly.
Ackman views Hertz as uniquely positioned within the current economic environment, suggesting that a 10% rise in used car values could yield approximately $1.2 billion in asset gains for Hertz. His price target for the company's shares is $30 by 2029, a significant increase from their current valuation of under $5. This projection relies on Hertz achieving higher revenue per unit and operational efficiencies, including increasing fleet utilization—a challenging task given historical rates.
Although some analysts maintain a cautious outlook on Hertz's immediate future, with several recommending holding or selling stocks, there is a hint of optimism from Ackman. He has also floated innovative ideas for Hertz, such as managing self-driving vehicle fleets for ridesharing services like Uber, a collaboration that the latter's CEO acknowledged positively.
In assessing this situation, it's important to recognize the volatility and risks associated with investments in the transportation sector, particularly given the shifts influenced by tariffs and technological advancements in mobility. The strategic direction taken by Hertz and the validation of its future growth through partnerships and technological integration could provide promising avenues for recovery. However, the company's ability to execute on these fronts remains critical, given the industry's historical challenges and competitive landscape.
Ackman views Hertz as uniquely positioned within the current economic environment, suggesting that a 10% rise in used car values could yield approximately $1.2 billion in asset gains for Hertz. His price target for the company's shares is $30 by 2029, a significant increase from their current valuation of under $5. This projection relies on Hertz achieving higher revenue per unit and operational efficiencies, including increasing fleet utilization—a challenging task given historical rates.
Although some analysts maintain a cautious outlook on Hertz's immediate future, with several recommending holding or selling stocks, there is a hint of optimism from Ackman. He has also floated innovative ideas for Hertz, such as managing self-driving vehicle fleets for ridesharing services like Uber, a collaboration that the latter's CEO acknowledged positively.
In assessing this situation, it's important to recognize the volatility and risks associated with investments in the transportation sector, particularly given the shifts influenced by tariffs and technological advancements in mobility. The strategic direction taken by Hertz and the validation of its future growth through partnerships and technological integration could provide promising avenues for recovery. However, the company's ability to execute on these fronts remains critical, given the industry's historical challenges and competitive landscape.