Hertz has executed a $350 million sale of convertible bonds, a move that paradoxically benefits short sellers, typically viewed as adversaries by companies. This strategy allows Hertz to raise capital while indirectly facilitating short positions on its stock, a departure from rivals like Avis Budget, which recently settled with a hedge fund over alleged short squeeze manipulation.

The rental car giant printed $100 million of new equity and loaned it to JPMorgan, which then provided shares to short sellers. This enabled them to borrow and sell Hertz stock, hedging against price volatility. This unconventional approach stems from Hertz's precarious financial position, including a warning of weak quarterly profitability and unexpected softness in used car prices, which impacts its core business of buying and selling vehicles.

Furthermore, Hertz is still contending with the fallout from a costly bet on Tesla electric vehicles, a strategy initiated by its controlling shareholder, Knighthead Capital. Despite efforts to control costs and the recent bond sale providing a reprieve until 2028 debt maturities, investor skepticism persists, evidenced by Hertz's stock trading around $2 after reaching $35 previously. With $6 billion in debt against a market capitalization under $1 billion, the company's reliance on short sellers signals a challenging path ahead.