Hertz Global Holdings, Inc. (HTZ) stock soared 14.15% in pre-market trading on Tuesday, following news that billionaire investor Bill Ackman's Pershing Square Capital Management has built a significant stake in the company. This surge comes as a welcome relief for the rental car giant, which has been struggling with recent financial challenges.

According to reports, Ackman's firm has accumulated a 19.8% stake in Hertz, totaling approximately 12.7 million shares. This substantial investment has sparked renewed interest in the company, which reported a staggering loss of nearly $2.9 billion in 2024 due to decreased electric vehicle prices and vehicle depreciation.

Ackman's optimism about Hertz's prospects stems from several factors. He believes the company can overcome its recent setbacks, including a poor investment in Tesla's electric vehicles. Additionally, Ackman anticipates that Hertz could benefit from potentially higher used-car prices resulting from the Trump administration's tariffs on U.S. auto imports. With a fleet of over 500,000 vehicles valued at nearly $12 billion, even a modest 10% increase in used car prices could result in a significant $1.2 billion rise in Hertz's auto assets.

Despite the positive market reaction, some analysts remain cautious about Hertz's long-term prospects. The company continues to face challenges such as high fixed costs for fleet management and vehicle depreciation. Moreover, economic uncertainty and potential reductions in travel spending could impact the rental car industry as a whole. Investors should carefully consider these factors alongside the recent surge in stock price before making investment decisions.