Why Hertz Stock Was a Massive Winner on Wednesday

Key Points

• Hertz will be slinging its used cars through a top online marketplace.

• Its inventory will include all major brands.

• 10 stocks we like better than Hertz Global ›

Storied auto rental company Hertz Global Holdings (NASDAQ: HTZ) took its investors on quite a ride Wednesday, with its shares accelerating to a 6% gain that trading session. The company's auto sales unit is teaming up with a top retailer, and the market clearly approved of the deal. That stock price pop was far more than good enough to beat the S&P 500 (SNPINDEX: ^GSPC) that day, as the indicator slipped by 0.2%.

Foot on the gas

Before market open, Hertz announced, surely with a fair degree of satisfaction, that its Hertz Car Sales has signed an agreement with Amazon Autos unit to sell its used vehicles.

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Image source: Getty Images.

Hertz added that the offered inventory would include autos from the top manufacturers in the world, including Toyota Motor, Ford Motor Company, General Motors, and others.

The vehicle rental incumbent extolled the advantages for car seekers of buying on Amazon Autos. Among the benefits, Hertz said that prices will frequently be beneath the Kelley Blue Book suggested retail value (a closely followed benchmark for used vehicles), and the offered cars will have each gone through a 115-point inspection by the company.

Another convenience is that buyers can purchase their vehicles on the site, then pick them up at a Hertz Car Sales outlet near them. Initially, however, this service is limited only to a few markets containing these outlets, specifically Dallas and Houston, Texas, plus Los Angeles and Seattle. All told, Hertz Car Sales presently has 45 locations around the country.

Details undisclosed

As with anything connected to Amazon, its auto marketplace is a high-profile, well-trafficked destination for vehicle buyers.

So this deal will undoubtedly provide a lift for Hertz's revenue and, likely, profitability. However, since the company didn't provide any details of the deal, nor did it supply estimates on how it might affect fundamentals, at this point it's hard to judge the ultimate impact it might have.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.