Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Hertz, the original meme stock, is turning out to be worthless

bloomberg.com

Post reply on HN
Print view View original

91–100 of 326 posts

Re: Hertz, the original meme stock, is turning out to be worthless

#91

Post by Judgmentality »

ludocode wrote: post #77
elif wrote: post #44

Earlier quoted context omitted.

TSLA is crashing because TSLA is not worth more than the rest of the top 10 manufacturers combined, as their market cap would suggest. Other notable differences include actively building the largest and most advanced factories on every major continent, disrupting the entire automobile industry such that even jaguar is going full electric by 2025, mainstreaming self-driving, and cutting the costs of residential solar…

> actively building the largest and most advanced factories on every major continent They are not the most advanced factories, not even close. Tesla uses much more human labor per vehicle than its competitors; the "alien dreadnought" never materialized. "Toyota remains well ahead of Tesla in terms of manufacturing efficiency, producing more vehicles per employee, while utilizing its fixed assets and inventory more ef…

> The industry shift towards electric vehicles is because it's finally becoming profitable to make them. This is largely due to a dramatic reduction in battery costs which is driven by R&D for smartphones, not cars. Personally I don't believe Tesla has much to do with it.

As much as I agree with the rest of your comment, I have to disagree with this part. Yes, there is a shift towards profitability with electric vehicles now and that has a lot to do with battery advancements from smartphones. But EVs still aren't exactly profitable, and when they are it's usually because of tax credits (granted that still counts, but it's important to mention).

It's important to remember traditional automobile manufacturers have decades of accumulated knowledge from spending hundreds of billions, if not trillions of dollars, on R&D for the internal combustion engine. Their processes are set up for it. Their tooling is set up for it. And more importantly, their business model which almost always focuses on maintenance costs is set up for it. It's like how Kodak invented the digital camera, but decided to continue with their legacy business because they were already set up for it.

There are many things I dislike about Tesla. But I genuinely believe they are responsible for bringing EVs to market ~3 years before it would have happened without them.

Re: Hertz, the original meme stock, is turning out to be worthless

#92

Post by MagnumOpus »

hellbannedguy wrote: post #27
Judgmentality wrote: post #11

Earlier quoted context omitted.

At the end of the day, people are betting on what they believe (or throwing away their money for the lulz). I genuinely, no bullshit, think TSLA is more irrational than GME, and has been for years. I put my money where my mouth is and I'm up 5x in 2 weeks. I know it won't last, but hey TSLA is crashing too. Nothing lasts forever.

GME is going back up right now. I don’t believe it’s disenfranchised Reddit young people anymore (if it ever was?). I guarantee there’s hedge funds who infiltrated the group playing up this one. Fictional fresh faced MBA from Jamie Diamond‘s outfit, “too the moon homie. Hold forever. They can take my wife, but not my GME. We tards are bringing down Capatalism.” (I used the T word because that the vernacular they use.…

No one from JPM or even big hedge funds was involved -- this is the one single thing that compliance and legal departments would be all over, so any well-regulated outfit with a compliance department would have staid well away from pump&dump. (The JPMs and Citadels made money from market making on stocks and options - there they made a year's worth of profits in a week.)

You are likely right that finance bros were (and still are) behind the polished 24/7 rocket memes, but they were likely small single-PM funds and non-regulated private players, posting behind 7 proxies to provide anonymity and plausible deniability against the SEC.

Re: Hertz, the original meme stock, is turning out to be worthless

#93

Post by hilios »

camjohnson26 wrote: post #46
unethical_ban wrote: post #7

Earlier quoted context omitted.

AMD isn't a meme stock - I knew it was going to be a safe bet when it was at 5, but didn't have money to do anything with it. It is guaranteed to exist, as it is the only x86 competitor to Intel, and IIRC their x86 license is non-transferable. It is nvidia's only main competitor. It does its job pretty well. Is it a blue chip in terms of stability? Clearly it is a bit more volatile. But it isn't dying anytime soon.

Respectfully those are meme stock arguments. A company can have all those things and be worth between 0 and 1 trillion, the question is whether the company is valued accurately by the markets and worth the price. Tesla is valued at what Apple was in 2019, but hasn’t made any profit ever without tax credits. AMD is at $100 billion, which seems high but could be worth it. Doesn’t matter if they mismanage cash and have…

With AMD you have the clear competitors Intel and Nvidia with their respective market share, revenue and valuation. There was a real world reason for their low valuation (Bulldozer) and a real world reason for there stock to recover (Zen). Intel had been stagnant for years and their 10nm was obviously not working. With AMD's and Jim Keller's track record there was a reasonable case for them managing to catch up and their stock to rise accordingly. If those are meme arguments the whole market is a meme.

Re: Hertz, the original meme stock, is turning out to be worthless

#94

Post by brandmeyer »

dwohnitmok wrote: post #85
brandmeyer wrote: post #78

Hol' up. While in bankruptcy, some fools ran up the price of Hertz stock. Then, while the price was up in the middle of bankruptcy proceedings , Hertz sold some new shares to the same fools. The final result of the bankruptcy wiped out all of the shareholders. While the buyers were obviously fools, Hertz should have known that zero shareholder value was a likely outcome. How was selling more stock in that situation l…

As usual, Matt Levine covered this pretty well in his newsletter: https://www.bloomberg.com/news/newsletters/2020-06-12/money-... The relevant quote: > Really I can’t decide how to feel about this. On first principles, you should not sell a billion dollars of stock in a bankrupt company to small retail investors who just installed Robinhood on their phones a few months ago. On the other hand, people are definitely do…

I like his argument. Its pretty reasonable in its principles.

But it doesn't work in this situation. Hertz raised 10^7 dollars this way when they were 10^9 in the hole. Looks to me like the executives saw an opportunity to part some people from their money and took it.

An outside investor is sharing shares they already have, or short-selling shares with the promise to buy them back later. That's wildly different from issuing new shares when you have inside information which prices them at zero.

Re: Hertz, the original meme stock, is turning out to be worthless

#95

Post by lotsofpulp »

brandmeyer wrote: post #94
dwohnitmok wrote: post #85

Earlier quoted context omitted.

As usual, Matt Levine covered this pretty well in his newsletter: https://www.bloomberg.com/news/newsletters/2020-06-12/money-... The relevant quote: > Really I can’t decide how to feel about this. On first principles, you should not sell a billion dollars of stock in a bankrupt company to small retail investors who just installed Robinhood on their phones a few months ago. On the other hand, people are definitely do…

I like his argument. Its pretty reasonable in its principles. But it doesn't work in this situation. Hertz raised 10^7 dollars this way when they were 10^9 in the hole. Looks to me like the executives saw an opportunity to part some people from their money and took it. An outside investor is sharing shares they already have, or short-selling shares with the promise to buy them back later. That's wildly different from…

> Looks to me like the executives saw an opportunity to part some people from their money and took it.

AKA business.

> That's wildly different from issuing new shares when you have inside information which prices them at zero.

That’s wildly different from Hertz’s bankruptcy being public information.

If people want to gamble on unlikely outcomes, that’s their business.

Re: Hertz, the original meme stock, is turning out to be worthless

#96

Post by geoduck14 »

xur17 wrote: post #87
djbebs wrote: post #83

Earlier quoted context omitted.

Why would it be illegal? Hertz was in bankruptcy because it couldnt pay its debts, a capital injection might have raised enough cash to pay off its debts and exit the bankruptcy proceedings. They disclosed the low likelyhood of such a thing happening but its not the law or the SECs job to make everyone take wise financial decisions.

> Hertz was in bankruptcy because it couldnt pay its debts, a capital injection might have raised enough cash to pay off its debts and exit the bankruptcy proceedings. While I do agree that it shouldn't be illegal, wouldn't they know how much money they would raise, and hence be able to determine if the capital raise would provide sufficient capital?

If they need to raise $1000, and you but $10 - no one knows if your investment is worthless until after no one buys the additional $990

Re: Hertz, the original meme stock, is turning out to be worthless

#97

Post by camjohnson26 »

scsilver wrote: post #74
camjohnson26 wrote: post #46

Earlier quoted context omitted.

Respectfully those are meme stock arguments. A company can have all those things and be worth between 0 and 1 trillion, the question is whether the company is valued accurately by the markets and worth the price. Tesla is valued at what Apple was in 2019, but hasn’t made any profit ever without tax credits. AMD is at $100 billion, which seems high but could be worth it. Doesn’t matter if they mismanage cash and have…

This is starting to feel like a moral crusade when that investment reasoning is consided meme/speculative arguments. I know retirement planners who manage 200m in asse6s who have been in business for 30+ years who look at the same reasonings as that. You cant really find an undervalued stop without some sort of assumptions. Might as well just buy an index fund.

It is a moral crusade to try to get people to understand risk. I can go all in on TSLA call options and make a killing and think I understand how markets work, but the risk I’m taking on by doing that is ridiculous. I’d like to know how those 30 year experience retirement planners did in 01 or 08. Bubbles happen because investors become comfortable taking huge risks that are unlikely to happen, but when they do they get crushed. Picking up pennies on front of a steamroller.

Re: Hertz, the original meme stock, is turning out to be worthless

#98

Post by ISL »

brandmeyer wrote: post #78

Hol' up. While in bankruptcy, some fools ran up the price of Hertz stock. Then, while the price was up in the middle of bankruptcy proceedings , Hertz sold some new shares to the same fools. The final result of the bankruptcy wiped out all of the shareholders. While the buyers were obviously fools, Hertz should have known that zero shareholder value was a likely outcome. How was selling more stock in that situation l…

Zero shareholder value was the overwhelmingly likely outcome, but not completely certain. (If Hertz magically recovered from bankruptcy, however unlikely, the payoff might have been >1000%).

The prospectus clearly stated that there was negligible likelihood of return.

On the flip side, from the creditor's perspective: "We loaned you a bunch of money, you can't pay it back, and there are some people who would like to buy shares in your company today? How can you not sell it to them?"

The unsecured creditors in this situation don't appear to be investment banks, they appear to be auto repair companies, perhaps exposed to counterparty risks from transacting with Hertz[1].

Your question brings to mind part of an exchange from one of my favorite pieces of financial cinema [2]:

SAM ROGERS: And you are selling something you know has no value.

JOHN TULD: (cuts him off cold) We are selling to willing buyers at the current fair market price, so that WE may survive, Sam.

SAM ROGERS: You'll never sell a thing to any one of them again.

JOHN TULD: I understand.

SAM ROGERS: Do you?

JOHN TULD: Do you!!! This is it, Sam, this is it!

[1] https://www.repairerdrivennews.com/2020/05/25/hertz-will-con...

[2] https://www.youtube.com/watch?v=7prnY2FOxns

Re: Hertz, the original meme stock, is turning out to be worthless

#99

Post by H8crilA »

brandmeyer wrote: post #78

Hol' up. While in bankruptcy, some fools ran up the price of Hertz stock. Then, while the price was up in the middle of bankruptcy proceedings , Hertz sold some new shares to the same fools. The final result of the bankruptcy wiped out all of the shareholders. While the buyers were obviously fools, Hertz should have known that zero shareholder value was a likely outcome. How was selling more stock in that situation l…

This is kind of the core principle of capitalism, informed consent. Also the primary objective of the SEC.

Hertz has issued a regulatory filing that basically says "lol this is worthless, but we can sell you some shares" and then sold some shares. Look up the filing, it's kind of hilarious. I've posted it on HN and it got popular, titled it jokingly as "Hertz Initial Bankruptcy Offering", the moderation has changed the title to the official name of the document.

Re: Hertz, the original meme stock, is turning out to be worthless

#100

Post by chrismeller »

tablespoon wrote: post #90
chrismeller wrote: post #48

Earlier quoted context omitted.

That seems like a bit of a simplistic view spurred on by people who don’t know what Chapter 11 is. It’s not “we don’t have any more money” or “we aren’t making any money”, it’s “we need a little court-mandated breathing room (from our creditors) to change x, y, and z, and then we’ll be ok”.

> That seems like a bit of a simplistic view spurred on by people who don’t know what Chapter 11 is. > It’s not “we don’t have any more money” or “we aren’t making any money”, it’s “we need a little court-mandated breathing room (from our creditors) to change x, y, and z, and then we’ll be ok”. It really depends on which "we" you're talking about: 1. What you said is probably true, from the perspective of the organiz…

Yes, the we were Hertz in that case, not shareholders.
Post reply on HN