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Hertz, the original meme stock, is turning out to be worthless
- llampx 6y agoI think TSLA and AMD were the original meme stocks.
- airstrike 6y agoWith TSLA and AMD, people at least had a thesis. One may argue those were wild equity stories, but at least they existed. Hertz is a dying company in a dying industry and while I admit I don't follow it closely, I have not seen anyone come up with a defensible story for why one should own that stock.
- VHRanger 6y agoThose at least had a growth story. HRTZ and GME are pure plays on the other hand.
- ex3ndr 6y agoWhere did you get this about GME? It literally skyrocketed once Chewy team started to take over and transform company.
- servercobra 6y agoPersonally, I think 80% of the reason it skyrocketed was for the short squeeze, 20% because of the new team and it being undervalued if you believed in that new team. $30-$40 seems reasonable if you believe the team is gonna turn the company around IMO, but people were putting thousands and tens of thousands into shares because they're hoping the short squeeze puts it to $1k+ (at least that's the meme/not a meme if you believe WSB).
- camjohnson26 6y agoIt became a Ponzi effect where buying made the price go up and encouraged more buying. Short interest being so high helped a lot.
- perardi 6y agoOK, what does that even mean? They are a physical store that sells physical games. Physical stores are in dire straits. Some new game consoles don’t even use physical games, namely the base PlayStation and Xbox. What do you even transform into? A dedicated amiibo shop? The future is pretty obviously download-only for games.
- ex3ndr 6y agoJust random though - turn them to a gaming cafe. I could see how from time to time I will join with my friends to play something old school way. For younger it is also cool - escape parents home.
- perardi 6y agoNot a bad idea. Though, N=1, malls have pivoted (sorry) into that sort of live event space mode. When I was visiting family, the local mall had replaced a former anchor store with a really quite nice arcade.
- unethical_ban 6y agoAMD isn't a meme stock - I knew it was going to be a safe bet when it was at 5, but didn't have money to do anything with it. It is guaranteed to exist, as it is the only x86 competitor to Intel, and IIRC their x86 license is non-transferable. It is nvidia's only main competitor. It does its job pretty well. Is it a blue chip in terms of stability? Clearly it is a bit more volatile. But it isn't dying anytime soon.
- deleted 6y ago[deleted]
- perardi 6y agoI give myself one good hard slap to the face every morning, because I bought AMD in the ~$5/share range, and then sold when it managed to get to ~$7/share because I didn’t think it was going anywhere. And then I go stand at the window and gaze longingly at my imaginary WRX parked outside. Sigh. If I only had known exactly how badly Intel would do…I bought the stock because I figured they’d get a little bump because of console sales, and then got impatient.
- camjohnson26 6y agoIt’s all gambling. People need to stop expecting to strike it rich and just build wealth incrementally. Central banks have made that hard to do though with historically low interest rates and rising risks of inflation.
- perardi 6y agoMind you, the vast majority of my retirement money is in index funds and other boring investment vehicles. The AMD trade was (reasonable) fun money.
- JoeAltmaier 6y agoSounds like advice for a previous generation. Then, it contradicts itself by say why it won't work (correctly). Maybe its time to rethink those half-century-old memes like 'build wealth incrementally'.
- aphextron 6y agoThe South Sea Company was the original meme stock.
- faceplanted 6y agoThat's kind of misrepresenting what the South Sea Bubble was, with meme stocks the public are at least in on the joke, the South Sea Bubble was a private conspiracy/social phenomenon of a different fashion.
- nl 6y agoReading some of the comments here it's pretty clear the many truly believe the GME hype: that it was somehow something more than a short squeeze, and that it is magically going to transform into a business with revenue able to support its current valuation.
- perardi 6y agoAMD was not a meme. If anything it was a proxy for TSMC doing well. The business case was apparent, and it happened: Intel apparently decided to get to their next node using, I don’t know, a magnifying glass and a flashlight, they fell badly behind, and now AMD has an extremely solid position in the high-end enthusiast market, plus a plum spot in PlayStation and XBox sales.
- jboog 6y agoIt's always interesting how the great investments are always so obvious looking in the rear view mirror.
- nl 6y agoTalking about the idea that AMD was a meme stock on HN seems strange. There were long discussions here before the AMD stock price rise about the technical merits of their platform, and further discussions about how they were getting better and better distribution after it did release. These are pretty fundamental reasons why a stock price might be likely to go up.
- VHRanger 6y agoObviously? The company was bankrupt. People who bought HRTZ after bankruptcy had to have known it was a game of financial musical chairs, much like GME, TSLA or BTC.
- tacheiordache 6y agoGME is not bankrupt yet (it is indeed overpriced and comparable to HRTZ), but TSLA and BTC? They don't belong to the same categories. TSLA and BTC will see a lot of gains to come. Eventually without a definite date what goes up comes down but it'd be silly to not take a piece of the pie yourself and keep your savings in cash...
- airstrike 6y agoBTC is not a stock so I really don't follow why people keep treating it like it has some underlying value
- Dirlewanger 6y agoIt has value because, again, other people think it has value. Otherwise it wouldn't be trading at ~$54k.
- croes 6y agoLike most stocks BTC's value depends on the buyers hope of a rise of the value. Buy low and sell high. For the original function of stocks, support a company and get a share of the profit, you are right about BTC.
- deleted 6y ago[deleted]
- PragmaticPulp 6y agoThat’s not really an accurate comparison. Stocks are ownership in a company, which is still subject to all of the realities of operating a company. We can’t simply continue trading Hertz stock as a speculative gamble when the company goes under. Yes, cycles of hype and supply and demand do distort stock prices, but it’s still a capital allocation market. GameStop can choose to sell shares into the hot market, much as AMC did, to raise money. Buyers of those shares are allocating capital into the company. One of the draws of Bitcoin as a speculative instrument is that there are no fundamentals. Without fundamentals, there is no mechanism to suggest if it’s undervalued or overvalued. The only thing a Bitcoin purchase funds is more energy expenditure on mining.
- CyberDildonics 6y agoPeople seem to forget that VW was part of a massive short squeeze that made it the most valuable company in the world for a few days. It took about a month for everything to deflate.
- tibbydudeza 6y agoPorsche tried to takeover VAG and it failed and saddled them with so much debt that VAG could swoop in later and take them over instead.
- mattmaroon 6y ago“Turning out to be” is a little disingenuous. It was never not worthless during its meme tenure.
- ec109685 6y agoInvestors were warned this was going to be the outcome given Hertz’s financial situation.
- mattmaroon 6y agoRight, it was always known and people bought it anyway. Next there’ll be a headline that GME was only really worth $15
- croes 6y agoDidn't Hertz self say, don't buy the stocks because they are worthless and we are broke?
- camjohnson26 6y agoYep, as they raised a round of capital. The people buying Hertz then were out of their minds.
- f430 6y agodo you know how long it took after the short squeeze before reality set in? literally AMC said they have trouble opening their theaters ---> wsb likes the stock
- dragontamer 6y agoJust look at their ticker symbol: HTZGQ Currently priced at $0.90.
- systemvoltage 6y agoI want us to get back to reality and fundamentals. These days it feels like the entire fabric of society is falling apart.
- vmception 6y agoironic writing this right before $2 trillion is about to get distributed to the people by Congress, while the Federal Reserve is still buying corporate bonds across the entire curve and mortgages using money created at the time of transaction.
- booleandilemma 6y ago"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-market-is-a-voting-machine https://www.goodreads.com/quotes/831517-in-the-short-run-the...
- jl2718 6y agoBut... “the markets will remain irrational longer than you will remain solvent”
- eafkuor 6y agoDoesn't this only apply to short selling? How does that apply if you are just buying stock to hold long term?
- jl2718 6y agoSurely short selling is more relevant, but the ‘weighing’ machine is basically irrelevant compared to speculation. For instance, what companies paid the most dividends over the last 20 years? Are those the companies with the highest valuations over that time? How long of a time horizon do you need to show cash flow value from an investment versus speculative gains? I’m going to pull out my crystal ball and predict that today’s biggest companies in market cap will have below-average dividend performance for the next 20 years compared to the rest of the S&P.
- throwaway5752 6y agoIt's not worth discussing BTC, TSLA, GME, or HTZ. That is missing the forest for the trees. The degradation of even the appearance of an orderly market is the story. The money movement (volume of excess trades X magnitude of price change) seems out of reach of unleveraged retail. Faith in private and public institutions is justifiably poor, but also under organized attack. This is going to end badly for everyone, except perhaps for China.
- jl2718 6y agoBook: “The Bubble that Broke the World” - Garrett 1931.
- ksdale 6y agoI think in regards to finance, the only thing that's under attack is the idea of "stock market as source of knowledge about value." But I'm not sure that the stock market has actually served that purpose for decades. IMO, it's good that people are beginning to see the stock market as a casino. If people want to "invest," they'll figure out more pro-social ways to do it than the stock market, and if they want to gamble, well, there's always the stock market.
- jboog 6y agoBen Graham said many decades ago that over the short term the market is like a voting machine but over the long term it's a weighing machine. There have always been periods of irrationality in the markets but there's no reason to believe that equities are fundamentally untethered from their inherent value in perpetuity. Eventually most of the overnight WSB stock picking geniuses are all going to lose their shirts and we'll see less of this GME nonsense. They make up a tiny fraction of trading volume anyway. It happened in '07-08, late 90s dot-com bubble and about every decade or so before that for different reasons
- ksdale 6y agoI like that Graham quote, and you make good points. I guess when I say "investing," I mean more like - Purchasing an equity entitles you to a share of that business' income and potentially assets, but if you buy the equity on the stock market, you're not actually investing in capacity, the way you would be if you bought an IPO or even just a piece of equipment you could use to make something. And I think people have always given the stock market more credit than it's due as being "the economy," when really the stock market is a set of signals about the economy. The economy is the people and machines and the buildings that do stuff and make things, and the economy remains regardless of what's happening in the stock market. If a bunch of silliness happens around a certain stock, or if the stock market becomes wildly detached from reality, it doesn't have anything to do with peoples' ability to produce value.
- brandmeyer 6y agoHol' 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 legal? I see that the sale was quickly shut down... but it shouldn't have happened in the first place.
- djbebs 6y agoWhy would it be illegal? Hertz was in bankruptcy because it couldnt pay its debts, a capital injection might have raised enough cash to pay off its debts and exit the bankruptcy proceedings. They disclosed the low likelyhood of such a thing happening but its not the law or the SECs job to make everyone take wise financial decisions.
- xur17 6y ago> Hertz was in bankruptcy because it couldnt pay its debts, a capital injection might have raised enough cash to pay off its debts and exit the bankruptcy proceedings. While I do agree that it shouldn't be illegal, wouldn't they know how much money they would raise, and hence be able to determine if the capital raise would provide sufficient capital?
- geoduck14 6y agoIf they need to raise $1000, and you but $10 - no one knows if your investment is worthless until after no one buys the additional $990
- dwohnitmok 6y agoAs usual, Matt Levine covered this pretty well in his newsletter: https://www.bloomberg.com/news/newsletters/2020-06-12/money-stuff-if-you-want-hertz-have-some-hertz https://www.bloomberg.com/news/newsletters/2020-06-12/money-... The relevant quote: > Really I can’t decide how to feel about this. On first principles, you should not sell a billion dollars of stock in a bankrupt company to small retail investors who just installed Robinhood on their phones a few months ago. On the other hand, people are definitely doing that anyway [emphasis original]; a notable feature of this weird pandemic market is exactly that hundreds of millions of dollars of stock in Hertz, which is bankrupt, are being sold to small retail investors every day. Hertz just wants permission to do some of that selling itself.
- neonate 6y agohttps://archive.is/gQx5w https://archive.is/gQx5w
- agumonkey 6y agomeanwhile GME is back to 200+
- sfjailbird 6y ago... and nary a headline. But we do get cautionary tales like the above. Sometimes I get the nagging feeling that the wallstreetbets conspiracy crowd might be on to something.
- agumonkey 6y agoThe medias are really not a critical piece of society these days.. it seems like more than half of it is just noise coverage.
- david927 6y agoAnd it will go much, much higher. GME is a short squeeze of epic proportions. It's going to be interesting to see how it plays out.
- xsmasher 6y agoif the wsb narrative is true - and that if they hold, the shorts must buy at any price - then why don't other knowledgeable traders and institutions recognize that and get in the game? In other words, if the wsb moon-theory is true, it would have already happened. Isn't it more likely that the price is, at this point, just getting pumped by memes and wsb throwing good money after bad?
- david927 6y agoBecause it’s going to crush the markets and the institutions. If you watch the media, there’s a serious panic going on. There is a serious chance this will cause a sort of financial Armageddon.
- jakearmitage 6y agoSome people in this thread should check their elitism. It is preventing you from seeing the big picture here.
- Hypocritelefty 6y agotoo bad that space Karen never took any interest in pumping hertz.
- ENOTTY 6y agoI deliberately bought a share of Hertz during the craze. I knew it had filed for bankruptcy. If Hertz was somehow rescued, I could make some money and have an interesting story. Maybe the shareholder meetings would be ridiculous parties with other crazy retail investors. But even if existing shareholders would be wiped out, I wanted to see first hand what happens in this sort of situation. (So far I haven't received any paperwork.)
- tomjakubowski 6y agoI never understood how stock market options worked (calls, puts) so I've spent a few dozen dollars buying various stupid out of the money options and following them (and then, agonizing over when to sell!). This has made me understand "the Greeks" better than any textbook alone could have done.
- rjbwork 6y agoYup. You gotta pay your tuition to the school of hands on trading for sure. It took quite a while for me to really grasp how they can all work in concert to move a position for and against you even if you are ostensibly right or wrong in your overall thesis.
- tomjakubowski 6y agoIt's fun to consider, "why's my counterparty selling this?"
- biolurker1 6y agoWhy would be curious about corporate bankruptcy procedures and spend time and money on it is beyond me but I'm sure that's not why the rest bought in.
- lucb1e 6y agoI'm involved in two cases: MtGox and Grupeer. Neither were publicly traded companies that went bankrupt, but they're insolvency cases in general. In the former I had some play money (by now the coins owed might be worth thousands, but back then it was pennies) and didn't spend time figuring this out properly, in the latter I have a few thousand euros and collectively we (~2500 people) got ourselves a law firm in the relevant jurisdiction. With MtGox, at some point some step on the website didn't work (I felt like I kept having to reiterate that, yes, I still want my coins back) and it seems I now lost my claim or something, I don't quit get it. With Grupeer, I notice that we're on top of every development, filing disputes where necessary, and while I still spent multiple evenings reading through documents and collecting my data for evidence, we've totally got this. If you ever find yourself with money in a bankruptcy and it is worth more than the lawyer's fee, definitely get a lawyer involved. They know what to file, to whom, when to take which step. The trustee or administrator is not going to come knocking on your door with your dues just like that.
- climb_stealth 6y agoCan someone explain to me what is happening with Hertz? They still seem to be doing business in Australia. I have rented cars with them in recent months. In my rental contracts it looked like the company was in the US. Has it been bought up? I have mostly good experiences renting with Hertz and I'd be sad to see them go.
- milesskorpen 6y agoIt went bankrupt, but will come out of it and continue to exist (with new owners).
- TaupeRanger 6y ago"The original meme stock"? The term "pump and dump" is a classic phenomenon that is very common and has happened for decades...this is neither new nor particularly interesting as a specific case.
- bschne 6y agoI thought „pump and dump“ refers to coordinated penny stock fraud whereas this was less of a coordinated scam and more the internet being the internet?
- muskox2 6y agoThey're not mutually exclusive. But as to what degree GME was or was not a coordinated scam, there's no doubt it has inspired other pump and dump schemes (RKT, DOGE)
- Thorncorona 6y agoThe original meme stock was tesla. Get it right.
- tick_tock_tick 6y agoOriginal?? Who remembers the glory days of MU!
- kjrose 6y agoHonestly when hertz pulled the selling more stock to suckers move I was shocked by the sheer ballsiness of the maneuver. Especially when they admitted that the stock would likely be worthless. Honestly, this is one of those situations where a bunch of people took a gamble and lost hard. Hopefully it will serve as a lesson for next time.
- Scoundreller 6y agoI think their buyers would have been the short coverers looking for an exit. A single share could be bored and shorted multiple times. Not overnight, but with enough time, you can end up with more shares short than shares that exist.
- kjrose 6y agoThat actually makes a lot of sense. I wonder if that was the play the whole time.
- raindropm 6y agoWhen the stock on the rise, people always think they're the shit, the genius investor blessed with lucky God — until it doesn't.