There’s been a surge of interest in stocks of companies in financial trouble, most notably Hertz (HTZ), which filed for Chapter 11 bankruptcy and was dumped by activist investor Carl Icahn only to be picked up by many users on Robinhood and other stock-trading platforms.
The interest in Hertz has been so hot that the company asked and was granted the right to sell $1 billion in new shares of stock that are essentially worthless.
“What you’re getting right now is this great disconnect between fundamentals and finance,” said Mohamed El-Erian, chief economic adviser at Allianz, on CNBC. “Take Hertz. A company in a bankruptcy procedure that saw its share price go up….now they’re talking about issuing stocks, warning investors they may be worthless.”
On June 9, Hertz opened at $3.37 and saw highs and lows of $6.25 and $3.09, respectively, which represent massive swings over 80%. The whole