VietJoy

Hertz Global Holdings Inc said it won bankruptcy court approval on Friday to sell up to $1 billion in stock, capitalizing on a remarkable rally in its shares driven by speculators defying conventional market wisdom.

Hertz's shares have risen 250 percent since June 4, even though their value is likely to be wiped out by the end of its bankruptcy process as creditors take over the U.S. car rental company. The shares soared as much as 680 percent earlier this week.

Investors, many of them amateur traders who use apps such as Robinhood, are betting on how high they can push the stock before it collapses. Record savings, stimulus checks, low interest rates and even lockdown boredom in the wake of the coronavirus outbreak have all been cited by market pundits as possible explanations for the extraordinary move.

The stock sale could benefit creditors seeking to recover more of their claims during the bankruptcy process. Hertz said in court filings that it would disclose to investors in the stock offering that the shares could "ultimately be worthless."

"Hertz is acting as if it wasn't bankrupt," said UCLA Law School professor Lynn LoPucki. "The market thinks there’s equity in this company."

Hertz, which had roughly $18.8 billion in debt at the end of March, is one of the largest companies so far to be undone by the coronavirus pandemic, which has crushed the travel industry.

Hertz is not the only U.S. company in bankruptcy whose shares have soared in recent days. J.C. Penney Co., Chesapeake Energy Corp and Whiting Petroleum Corp have also seen similar rallies.

Hertz, which filed for bankruptcy protection on May 22, was among the most popular companies on the Robinhood app used by mom-and-pop investors earlier this month.