Tens of thousands of traders have sent Hertz’s shares rallying a few days after it filed for bankruptcy protection on May 22, many of them on the Robinhood app, Reuters reported. Other shares of bankrupt companies, such as J. C. Penney Company Inc. and Whiting Petroleum Corp., have seen similar rallies. Shares in some obscure penny stocks have soared. It is a trading strategy that goes against Wall Street norms and is not for the faint-hearted. Hertz has warned that its bankruptcy process could render its shares worthless. Investors are betting on how high they can push the shares and are risking big losses if they can’t quickly flip them to someone else. Pundits have struggled to explain the frenzy of speculation. Record savings, low interest rates and even lockdown boredom in the wake of the coronavirus outbreak have all been cited as possible explanations for the extraordinary market moves. Hertz itself has noticed. It launched an effort this week to sell $500 million worth of its stock in the open market, a remarkable move for a company in bankruptcy. This has still not put off some investors. Hertz’s stock is up 388% from the low it hit after it filed for bankruptcy. It remains among the most popular stocks traded on Robinhood.
