As soon as the news of the collaboration between Hertz and Amazon broke, many investors started to follow this development. After all, it is indeed eye-catching that Hertz, a company that has been in the car rental business for a long time, will actually be selling used cars on Amazon's website. Just think about the potential of this collaboration—it could greatly expand Hertz's used car sales business! However, of course, this is also an experiment, initially taking place only in a few major cities like Dallas, Houston, Los Angeles, and Seattle. But for consumers, it's like browsing an online used car market, finally being able to conveniently find the desired model.

The benefits of Amazon are also obvious. Since the launch of the Amazon Automotive site less than a year ago, the range of options for consumers has actually been quite limited. However, now, with the cooperation with Hertz, the selection of brands and models on the site will be greatly enriched. This is definitely a great addition for Amazon.

For Hertz, entering the online used car market is undoubtedly an opportunity. If consumers are really willing to purchase used cars online, it means they can select various models through a simpler and more convenient process. Currently, Hertz mainly sells its rental fleet through its retail stores in the United States, along with additional revenue sources such as selling warranties and providing financing. However, the number of used cars sold by Hertz is not clear; it is only known to be in the "thousands" range, making it difficult to specifically assess the impact of this collaboration on cash flow.

If the cooperation with Amazon goes smoothly, Hertz will expand its used car business and diversify its sources of income. CEO Gil West is also gradually advancing his plans to expand retail operations and enhance the brand awareness of Hertz used cars.

So, should we consider buying Hertz's stock? Hertz mainly has two major businesses: Americas RAC and International RAC, both of which provide car rental services and also sell additional services such as insurance and satellite radio. Unfortunately, Hertz's core car rental business is currently struggling, with both sales and profits declining. Last quarter's revenue fell by 7%, amounting to only $2.2 billion, and the adjusted ongoing loss reached $104 million.

Although exploring new areas is challenging in the face of difficulties in core business, if Hertz can succeed, shareholders may have the opportunity to profit from the company's valuation. The company's stock price has risen 74% over the past year, and while the price-to-sales ratio has doubled, it currently remains low at 0.2. In contrast, the price-to-sales ratio of small-cap stocks is about 1 or higher. However, the cooperation with Amazon is still in the experimental stage. For long-term investors, it may be wiser to wait and see until the pilot results come out before making a judgment. If Amazon and Hertz decide to continue expanding their cooperation, that would be a clear positive signal. 📈

What do you think of this collaboration? Do you think Hertz can successfully transform? Feel free to leave a comment with your thoughts~