Hertz and AMC Are Back In the News. Should Investors Buy?

Remember when meme stocks were all the rage? Well, two of the biggest meme stocks are back in the news, for very different reasons. 

Let’s take a closer look:

Hertz Is Back, but Will the Rally Continue?

Shares of Hertz Global Holdings HTZ soared on Wednesday, on word that hedge fund investor Bill Ackman made a significant investment in the company’s stock. 

In a filing, Ackman's Pershing Square Capital Management hedge fund disclosed a 4.1% stake in the auto rental company, as of the end of last year. 

According to a source, Ackman’s position has grown significantly since then. Today, Ackman controls nearly 20% of the company.

On Wednesday, Hertz closed at its highest level since October of 2023. 

After gaining 56% during the regular session, the stock continued to soar after hours. 

Retail investors piled into this stock in the early days of the meme stock craze in 2021. Thanks to its low price and its emergence from bankruptcy in 2021, Hertz gained the attention of stock trading groups on Facebook and Reddit. 

This led to a one-day gain of 208%, but that was nearly four years ago. 

This company is a money-losing machine. In the quarter ending in December 2024, Hertz lost $84 million. In the quarter prior to that, Hertz lost $74 million. In all, Hertz lost $2.9 billion in 2024.

Now, consider that Tesla TSLA is about to unleash a fleet of self-driving, rideshare robot-vehicles that will likely operate 24 hours a day. Hertz is already besieged by rideshare providers Lyft LYFT and Uber UBER, as well as numerous low-cost competitors like Thrifty and Dollar Rent-A-Car.

I realize that some folks are betting that tariffs will cause the value of Hertz’s fleet to appreciate, but the fact is, nobody knows if that’s the case.

Considering all of the above, the future of Hertz is far from assured. 

AMC’s Adam Aron Addresses Shareholder Concerns

Speaking of meme stocks, one of the most popular names in the early days of the meme stock craze was AMC Entertainment AMC.

Early on Wednesday, AMC's CEO Adam Aron posted on social media site X. Aron addressed shareholders who’ve been calling on him to add to his AMC position, as many of them already have.

Aron listed four reasons why he hasn’t added to his shares. The last reason raised a few eyebrows:

“...for quite some time now, I personally have been in possession of what is known as MNPI (material non-public information). When that is the case, it is patently against U.S. law for a CEO of a publicly traded company to buy its stock...”

In the responses to Aron’s post, you could see the wheels turning in retail traders’ minds. Many of the respondents assumed that Aron was hinting at positive news, even though he never indicated whether it was positive or negative.

Those investors were merely projecting their hopes and wishes onto Aron’s post. When the market opened, the stock gapped lower and lost 5.4% on the day. 

Should Investors Buy Hertz or AMC?

Why are investors attracted to companies with questionable futures, like Hertz and AMC? It’s the dream of a quick hit, or a 10-X investment.

The hard truth? AMC has lost 80% of its value over the past five years. Hertz has fallen by 76% over that time. Investors have lost entire accounts over these stocks.

There are literally thousands of stocks available to the public. Why invest in companies that are struggling to turn a profit, or face challenges due to advances in technology? 

Needless to say, I won't be buying shares of Hertz or AMC. 

At the time of publication, Ponis had no positions in any securities mentioned.