Hertz Global Holdings Inc. shares dropped sharply on Tuesday, marking the steepest decline in two years for the car rental giant. The sell-off came after the company warned that fourth-quarter profit is tracking toward the lower end of its guidance range, citing weakness in the used car market that has pressured earnings expectations.

The disappointing outlook stems from what Hertz calls 'softness' in used vehicle values, a critical concern since the company relies heavily on disposing rental fleets to generate revenue. When used car prices weaken, Hertz's ability to profitably rotate its fleet takes a direct hit, creating a ripple effect through its business model.

To shore up its balance sheet, Hertz announced concurrent offerings of both common stock and convertible notes, seeking to raise capital amid uncertain market conditions. These transactions typically signal a company's need for liquidity or strategic flexibility during challenging periods.

Investors reacted swiftly to the dual news of weakening fundamentals and capital raising, sending shares tumbling as concerns mounted about Hertz's recovery trajectory. The stock's two-year worst performance reflects market skepticism about near-term prospects.