Hertz stock price lost more than 95% of value in the past couple of months as coronavirus pandemic has devastated its business model and short-term outlook. The company also filed for chapter 11 bankruptcy due to a lack of cash resources to pay debt payments.    

The company says COVID-19 impact on travel demand was dramatic and sudden, resulting in a massive decline in the revenue and future bookings.

“We took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending, and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today’s action,” the company said.

Hertz Fell Below $1 After Carl Icahn Exit

Hertz debt stands around $19bn including some $4.3bn in corporate bonds and loans as well as $14.4bn in vehicle-backed debt.

Its shares are making big price swings over the last couple of days. Hertz stock price rose more than 120% in Wednesday trading, but the stock price fell back below the $1 level after reports that Carl Icahn exited its entire stake. Ichan sold almost all of its 39% stake in the car rental company worth close to $700M.

Carl Icahn said “I have been an investor and supporter of Hertz since 2014. Unfortunately because of COVID-19 which has caused an extremely rapid and substantial decrease in travel, Hertz has encountered major financial difficulties and I support the Board in their conclusion to file for bankruptcy protection.”

“I sold my equity position at a significant loss, but this does not mean that I don’t continue to have faith in the future of Hertz,” he added.

Due to sluggish travel demand and bleak outlook, the company is likely to post a massive revenue decline and big losses for the second quarter, with the extension of depressed performance into the following quarters.