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

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

#231

Post by rurp »

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…

If people are choosing to buy the stock, why does it matter if the seller is the company rather than anyone else in the world? The purchasers are getting the same deal. If it's perfectly fine for a purchaser to pay a random investor $2.58 for a share of Hertz, it should be fine for them to purchase the exact same share for $2.58 when the counter party happens to be Hertz.

If Hertz had been dishonest or misleading about the situation then that would be a problem, but they were completely upfront about the risks.

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

#232

Post by ineedasername »

dragontamer wrote: post #225
ineedasername wrote: post #221

Earlier quoted context omitted.

Filing bankruptcy is not an automatic thing. Should the company, during the course of the bankruptcy, somehow manage to bounce back and obtain enough capital to remain solvent, the court may dismiss the bankruptcy since the company no longer needs legal protection to restructure its debt or gracefully liquidate its holdings. In addition to the court finding that a bankruptcy is no longer appropriate, either the debto…

Or... Hertz can organize Chapter 11 bankruptcy, wipe out large portions of its debt, and then bounce back. Bankruptcy protects the company and allows a company to come back stronger. That's the ultimate issue: with debts this large, it makes sense for Hertz to give up on its debt rather than try to pay it off. ---------- Its not like Chapter 11 is a death-knell for a company. GM went Chapter 11 years ago, and came ba…

Yep, and this is in fact the type of bankruptcy Hertz is pursuing. Re-org, not a chapter 7 liquidation.

But to clarify, not all investors get screwed. (or at least not completely). Stock owners, unless they're of a class with a higher claim than normal common stock, will usually (though not always) lose everything. However, many bondholders will receive some of their money. How much is determined by many factors, including the type of bond and how senior the debt associated with it.

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

#233

Post by RIMR »

exporectomy wrote: post #216
jboog wrote: post #139

Earlier quoted context omitted.

If you read some of the posts on WSB a huge number of people just really have no clue about capital markets, investing, or basic business sense. I don't know how many times I saw people claiming GME would go to $1000 because the new CEO has a brilliant new scheme to turn the company around by going digital! Why "going digital" in 2021 means your company is worth 100X what it was a few months ago I'll never quite unde…

> Why "going digital" in 2021 means your company is worth 100X what it was a few months ago I'll never quite understand. Understand it or not, it happened. Going from $3 to $300 in under a year. Just because some people stated seemingly silly reasons for their predictions doesn't mean everyone betting on it is stupid. They may be trying to encourage others, have an intuition, hope to detect the peak and quickly sell,…

So just to get this straight, you think that GME stock went from $3 to $300 because of productive business decisions alone?

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

#234

Post by pessimizer »

dragontamer wrote: post #188
HPsquared wrote: post #184

Earlier quoted context omitted.

The people buying the shares are making the "true" valuation of the company, being the ones buying it.

Do you think the buyers of HTZGQ at $5.50 in June 2020 will be proven correct? Or do you think, that like most other bankrupt companies, HTZGQ will be worthless once these bankruptcy proceedings are done? The stock is almost certainly going to go to $0. That's just what happens as bankruptcies play out. If you disagree, you're welcome to toss your money into buying some HTZGQ yourself. ---------- The issue is that He…

Modern finance is a process of constantly repackaging and reselling risk from people in a better position to evaluate that risk to people in a worse position to evaluate that risk. Finally, after a dozen generations when it arrives at the people least able to evaluate the risk, it crashes to zero, followed by sympathy to the poor suckers (like your local school district) and a bailout.

Hertz just cut out the middle men here and sold directly to suckers, maybe a lot of their executives were also creditors.

Can I interest you in an Iraqi Dinar?

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

#235

Post by kpommerenke »

TomSwirly wrote: post #160
lotsofpulp wrote: post #95

Earlier quoted context omitted.

> 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.

Selling something that you know will end up worthless because you know suckers will buy it is wrong. It's morally and ethically theft. Gross, filthy, self-conscious theft. The fact that people just laugh and say, "That's business!" is an indication of how morally bankrupt the business world is.

Let's not talk about Bitcoin again.

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

#236

Post by krick »

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…

I see zero problems with Hertz being allowed to do that. You either forbid stock markets, or you let people sell what other people want to buy.

But in the hindsight, I don't really understand why Hertz wanted to do that. It's obviously good for bankruptcy court, that's clear. It might be good for WSB, for some independent speculators. But what does Hertz as a company gain from that? How can it benefit any of decision-makers? They are going bankrupt anyway, whatever they raise is not their money anymore. Surely they didn't hope selling stock would save them from bankruptcy? So why even bother doing something so sketchy?

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

#237

Post by unethical_ban »

jboog wrote: post #148
unethical_ban wrote: post #79

Earlier quoted context omitted.

No, they're stock arguments. They're "fundamentals". Did I look at their balance sheet, no. But asking questions about their competition and likelihood of being around and healthy in a few years isn't meme. Even "Hey this has short 140% of float" isn't a meme stock thing. The definition of "meme" stock is it being a meme - is it getting hyped up on social media and reddit with inside jokes and collective action (as m…

>"They're "fundamentals". Did I look at their balance sheet, no." Please for the love of god tell me you are trolling right now.

Not quite. I looked at a small piece of a picture, and the parent is accusing me of reading a reddit thread and going "ape strong, AMD to the moon".

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

#238

Post by jamez1 »

dragontamer wrote: post #180
thaumasiotes wrote: post #176

Earlier quoted context omitted.

What I don't understand is that Hertz specifically wanted to sell an amount of shares that wouldn't raise enough money to pay off their debts. Their prospectus noted that shares sold would automatically become worthless unless their debt was paid off , which they didn't anticipate. But why not try? What if they sold so much stock that the bondholders could just be paid back? Why do the stock sale specifically plannin…

Many would suggest that such an action you propose is fundamentally immoral. Lets say a hypothetical company is overall $-4 Billion in debt (total assets - liabilities). You successfully raise $5 Billion from some means. Now you're in a position where you sold $5 Billion worth of shares on a company that (by all fair evaluations) is only worth $1 Billion after the capital raise.

No, the enterprise value of the company doesn't change. It was owned by 4b of debt before and is now owned by 5b of equity, and has 1b in cash. It also has an intact business.

Under your logic no company would ever raise equity to pay off debt.

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

#239

Post by ManifestTendy »

candybar wrote: post #109
Judgmentality wrote: post #19

Earlier quoted context omitted.

I think it's obvious that I am holding a substantial amount of GME right now, and I think I should disclose that. Ryan Cohen, the guy who founded Chewy, is on the board for GME and leading an initiative to transform Gamestop into an e-commerce store. In other words he wants to compete directly with Steam, and while many don't realize it yet, Amazon. And this is one of the only people in history who has successfully b…

How does any of this change GME's valuation? Any company can decide to get into anything - the existence of an opportunity that everyone is aware of doesn't impact the company's valuation unless the company's uniquely suited to exploit the opportunity. I don't see how GameStop is particularly well-situated to take advantage of e-commerce or streaming opportunities. They don't have any unique offerings or substantial…

>I don't see how GameStop is particularly well-situated to take advantage of e-commerce or streaming opportunities

I don't massively disagree, but perhaps you underestimate the prevalence of their brand right now. Gamestop is salient in the gaming and internet communities.

What of 'irrational' consumer behavior?

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

#240

Post by eafkuor »

jl2718 wrote: post #66
booleandilemma wrote: post #38

Earlier quoted context omitted.

"In the short run, the market is a voting machine but in the long run, it is a weighing machine." https://www.goodreads.com/quotes/831517-in-the-short-run-the...

But... “the markets will remain irrational longer than you will remain solvent”

Doesn't this only apply to short selling? How does that apply if you are just buying stock to hold long term?
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