This week's autopsy is one of the strangest stories I have covered.
A company files for bankruptcy. Owes $19 billion. Cannot make its debt payments. And then its stock goes up 1,400%.
Not because the business recovered. Not because anyone found a solution. Because retail investors on Reddit decided a bankrupt car rental company was undervalued.
This is Hertz. And the story is not about the meme stock rally. The meme stock rally is just the punchline.
The real story is about what private equity does when it buys a business, loads it with debt, extracts what it can, and hands the bill to someone else. That is what this week's autopsy covers.
— The Vulture
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THIS WEEK'S AUTOPSY
The short version of what happened to Hertz:
In 2005, Clayton, Dubilier and Rice, Carlyle Group, and Merrill Lynch Private Equity paid $15 billion for Hertz. They put $2.3 billion of their own equity in. The other $12.7 billion? Debt. Loaded onto Hertz's balance sheet. Not theirs. Hertz's.
By the time the 2008 financial crisis hit, Hertz was carrying obligations it could not restructure fast enough. Then COVID hit in 2020. Every rental car sat idle. Revenue collapsed overnight. With $19 billion in debt and no income, Hertz filed for Chapter 11 in May 2020.
Then came the meme stock moment. Retail investors — many of them first-timers who had discovered trading apps during lockdown — started buying Hertz stock. A bankrupt company. Whose equity was almost certainly worthless. The stock went from 56 cents to over $6. A 1,400% increase. While the company owed $19 billion it could not pay.
Hertz actually tried to issue new shares during the bankruptcy to capitalize on the rally. The SEC stopped them.
Eventually, the bankruptcy was resolved. Hertz emerged in 2021 under new ownership. The private equity firms that loaded it with debt had already taken their fees and their dividends before the filing. They walked away. The creditors negotiated recovery. The retail investors who bought at $6? Most of them lost everything.
That is the Hertz autopsy. Full episode is on YouTube now. Link below.
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THE WATCHLIST
Three companies showing distress signals right now. Not financial advice. Do your own research.
JOANN Inc.
Craft retail chain. Filed Chapter 11 in early 2024, emerged, then filed again in 2025. Watching: same-store sales decline, inventory bloat, lease obligations. This is a company that has not fixed what put it in bankruptcy the first time.Spirit Airlines
Ultra-low-cost carrier carrying heavy debt load. Filed Chapter 11 in November 2024. Watching: fleet utilization, cash burn rate, and whether the restructuring plan actually reduces fixed costs or just defers them.Rite Aid
Pharmacy chain that filed Chapter 11 in 2023. Watching: store closure pace, creditor negotiations, and whether the remaining footprint is viable without the debt it shed. A restructured retailer is not automatically a recovered one.
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THE VULTURE'S PICK
Every issue I share one tool or resource I actually use in my research. Coming in the next issue.
— The Vulture
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NEW ON YOUTUBE
This week's episode is live now.
Hertz Became a Meme Stock While Owing $19 Billion in Debt.
How private equity loaded it with debt, how the bankruptcy filing happened, and how retail investors turned a Chapter 11 into a 1,400% stock rally.
Watch it here:
https://www.youtube.com/@thewallstreetvulture
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BEFORE YOU GO
On Friday I'm releasing the next autopsy. This one is about a retail empire that once had 3,500 stores across America. And a CEO who — while the company was collapsing — bought the real estate out from under it. For himself. The creditors got pennies. He got the buildings.
That is the Sears autopsy. Friday. 7:00am Eastern.
— The Vulture