GME Redux? Hertz Short Squeeze Drama Sparks Reddit Community Discussion

August 10, Low-priced stock Hertz Global (HTZ) has recently become the focus of attention among Reddit retail investors. Benefiting from better-than-expected second-quarter performance, HTZ soared significantly after the earnings report, leading the market to compare this car rental company to 2021 meme stocks like GME and AMC.

According to BIT (bit.com) market data, HTZ surged by about 30% after the earnings report on Thursday, continued to rally during Friday's trading day, with significantly increased trading volume, attracting discussions from retail investor communities like WallStreetBets.

MarketBeat data shows that as of July 15, the short interest in HTZ was approximately 97.54 million shares, accounting for about 31.2% of the float, with a days-to-cover ratio of about 3.9 days. The high short interest combined with the sudden surge has made short covering a key driver of this round of trading.

The fundamental catalyst came from Hertz's latest earnings report. The company reported second-quarter revenue of approximately $2.396 billion, a year-over-year increase of about 10%; a net profit of approximately $64 million, compared to a $294 million loss in the same period last year. The company reported a loss per share of $0.11, better than the market's expected loss of $0.24 per share; adjusted EBITDA was approximately $81 million, close to the upper end of the guidance range. The improvement in used car prices will also alleviate previous concerns in the market about the decline in fleet residual values.

This rally occurred against the backdrop of a resurgence in U.S. stock market risk appetite. Last Friday, U.S. job data unexpectedly weakened, cooling the market's bets on further Fed rate hikes, with the 10-year Treasury yield falling to around 4.64%, the S&P 500 hitting a new all-time high, the Nasdaq rising by 1.3%, and the small-cap Russell 2000 index strengthening simultaneously. As funds once again chase high-beta targets, low-priced, heavily shorted stocks like HTZ are more likely to become short-term trading targets.

However, compared to the GME situation in 2021, HTZ still has a gap in its short squeeze structure. SEC reports showed that GME's short interest once exceeded 100% of the float, while around 30% of HTZ's float is currently shorted. Although at a high level, it has not yet reached an extreme level.