Robinhood traders are apparently hell-bent on resurrecting Hertz despite the company’s repeated warnings that its stock could soon be “worthless.”
Hertz stock has miraculously pumped once again and (surprise, surprise) Robinhood traders like what they see. $HTZ went from Tuesday’s low of $1.11 to a high of $2.38 on Wednesday — up 114% in 24 hours.
Such a sudden rise would presumably trigger Robinhood traders to sell their Hertz shares en masse. After all, two weeks have passed since the car rental firm’s bankruptcy filing illogically triggered its stock to surge 680% in four days.
In that time, Hertz stock would fall from $6.25 to well below $1.20. Anyone who’d bought below $2.30 might’ve seen Wednesday as an opportunity to exit once and for all, considering the risks associated with investing in companies who’ve filed Chapter 11s.
[Read: The ‘average’ Robinhood trader is no match for the S&P 500, just like Buffett]
Well, not only did Robinhood users as a whole miss selling Wednesday’s top, nearly 7,500 traders took fresh positions in Hertz after that pump — likely anticipating another impending head-scratching multiplication.
The number of Robinhood users holding Hertz rose at yesterday’s peak
Hard Fork analyzed Wednesday’s Hertz pump against the Robinhood popularity data provided by Robintrack. Updated hourly, Robintrack’s data tells us exactly how many users were holding Hertz stock at any given moment.
Unfortunately, the data doesn’t reveal how many Hertz shares are held, or the trade position of each holder; but it does offer a glimpse into the general sentiment of Robinhood‘s userbase as a whole.
(NB: It must be clarified that the numbers in this article reference the provably minimum number of new holders. If there were 10,000 holders at midday and 15,000 at 2PM — one can only prove the existence of 5,000 new holders.)
At midnight on Tuesday, there were 152,503 Robinhood users holding Hertz stock. After opening the next day at $1.56, a small number of traders sold everything in the wake of Hertz‘s ‘pre-pump’ to $1.65.
There would be no real change in the number of Hertz holders over the next few hours, even as $HTZ shot up 70% to reach its daily height of $2.37 at 14:30 UTC.
But, while loads of traders clearly missed the chance to sell $HTZ at Wednesday’s top, 81 lucky users did try to catch the ‘falling knife’ on its way down.
More than 6,500 Robinhood users would go on to add Hertz to their portfolios between 14:45 and 18:45 UTC, and by the end of the day that number had reached 7,484. Presumably, they’re anticipating $2.37 to be just the beginning for Hertz.
Okay, maybe we won’t dump our stock on the retail crowd
For what it’s worth, Hertz rescinded its questionable plan to sell up to $500 million worth of fresh stock last week.
The idea was to capitalize on its newly-found popularity amongst retail investors, but the SEC understandably had some problems with such an unusual request.
Analysts have started to speculate that the company might look to raise cash by selling off its inventory to competitors, namely AutoNation, CarMax, and Avis.
Outside of that, Hertz likely needs to raise upwards of $900 million worth of debt to survive, according to an industry note shared by Business Insider.
While all that plays out, there remains roughly 160,000 Robinhood users still holding Hertz stock. Hands. Of. Steel.
Published June 25, 2020 — 17:52 UTC