What Happened?
Shares of equipment rental company Herc Holdings (NYSE: HRI) fell 12.1% in the afternoon session after the company reported mixed fourth-quarter 2025 results and issued a disappointing outlook for 2026.
While the company's adjusted earnings of $2.07 per share surpassed analysts' expectations, its revenue of $1.21 billion fell short of forecasts. The bigger concern for investors, however, was the company's financial guidance for the upcoming year. Herc's full-year 2026 revenue forecast came in significantly below Wall Street estimates, suggesting slower growth ahead. Furthermore, its adjusted earnings per share of $2.07 represented a 42% decline compared to the same quarter in the previous year. This combination of a revenue miss, a steep drop in profitability, and a weak future outlook prompted a negative reaction from the market.
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What Is The Market Telling Us
Herc’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. But moves this big are rare even for Herc and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 11 days ago when the stock gained 5.5% on the news that the broader market rebounded from a tech-driven sell-off, with investors taking the opportunity to buy stocks at lower prices.
This rally was fueled by a recovery in technology stocks and a significant bounce in Bitcoin, which stabilized after losing over half its value from its October peak. Investor sentiment was also lifted by a surprising improvement in U.S. consumer sentiment and the realization that massive AI-related capital expenditure, such as Amazon's planned $200 billion, directly benefits chipmakers like Nvidia and Broadcom. These "pick-and-shovel" winners jumped as much as 7%, helping the S&P 500 edge back into positive territory for 2026. The highlight of the day was the Dow Jones Industrial Average, which surged and crossed the historic 50,000 threshold for the first time.
Herc is up 1.5% since the beginning of the year, but at $154.59 per share, it is still trading 16.6% below its 52-week high of $185.37 from February 2025. Investors who bought $1,000 worth of Herc’s shares 5 years ago would now be looking at an investment worth $2,118.
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