Bill Ackman's bet on Hertz may take a little longer to pan out.

The car rental company missed first quarter revenue and earnings estimates on Monday, sending shares down more than 4.7% after-hours to $6.61.

Hertz reported a first-quarter net loss of $443 million, as revenue declined 13% to $1.8 billion from $2.1 billion a year earlier. Analysts expected revenue of $2 billion, according to consensus estimates. The company lost $1.12 per share, missing consensus forecasts for a loss of $0.98 a share.

Hertz stock is down sharply from its post-bankruptcy 2021 highs around $35 and would likely be worth even less without Ackman. The hedge fund manager recently took a 20% stake in the company, sending its shares surging more than 50%. As Ackman sees it, the stock could reach $30 by 2029, netting roughly Ackman $1.4 billion from recent prices alone.

But Hertz has a long road back to profitability. And while the company said it's making progress on a turnaround, Wall Street sees more trouble ahead. The average price target on the stock is around $4, according to FactSet, and 45% of the shares are held short, an exorbitant bet against Hertz's fortunes.

"There's a lot of work to do, and it's not all within their control," said Deutsche Bank analyst Chris Woronka, who had a $3 target on the stock before the company's latest earnings report.

Pershing and Hertz declined to comment.

Ackman laid out his case for Hertz in a post on X. The story hinges on a turnaround under CEO Gil West, who took over in March 2024, along with a bump in the value to Hertz's fleet of 500,000 vehicles.

Ackman argues that boosting operating margins on car rentals, cutting depreciation expense, and making other cost adjustments will yield $2 billion in annual Ebitda, or earnings before interest, depreciation, taxes and amortization. On the asset side, Ackman argues Hertz's fleet will be worth $1.2 billion more if used-car prices rise by 10%, thanks to Trump's tariffs raising the value of new cars by at least that amount.

Ackman also takes solace in Enterprise, Hertz's privately held rival, which he calls the industry's best-run player. "Enterprise's high profit margins (we believe +20%)...demonstrate that the car rental business can be very profitable," he wrote.

Analysts see hurdles. The company posted a $1.5 billion Ebitda loss last year, and Wall Street sees just $100 million of Ebitda this year and $500 million in 2026, according to consensus estimates.

An overhang is Hertz's balance sheet, including more than $5 billion in non-vehicle debt. While the company has been working to extend the maturities of its debt commitments, at least $500 million at fixed rate of 4.63% comes due in 2026, and may need to be refinanced at higher rates, adding to Hertz's $370 million in annual interest expense. Woronka estimates Hertz will need $500 million a year to cover interest expenses and invest in the business, beyond refreshing its fleet, leaving very little for the bottom line.

Hertz's fleet is also a problem child. The company added 100,000 Tesla cars after it emerged from bankruptcy, making a big bet that consumers would lap up EV rentals. But the cars proved costly to repair and renters have been skeptical, given the paucity of charging stations. The problems compounded as EV sales slowed and the value of used Teslas crumbled. The company posted a loss of $2.8 billion in 2024 as it unloaded fast-depreciating EVs at discounted prices. The problem should largely be behind Hertz now, says Woronka.

Still, Hertz compounded its own issues by borrowing to fund share repurchases, leaving less cash to grow the rental business. The company "blew the bank on share buybacks, and now they are sitting here with massively lower Ebitda and higher debt," says Oppenheimer analyst Ian Zaffino, who has a $4.16 target on the stock.

While Hertz is no longer burning cash on buybacks, the company lost a court fight over the way it treated bondholders during its 2020 bankruptcy. Hertz has appealed to the U.S. Supreme Court, but a loss there could put it on the hook for another $320 million.

Hertz said Monday it's on target to meet a goal of "sub $300 depreciation" per car faster than expected with model 2025 years already there. The company added that it's on track to achieve positive corporate Ebitda by the third quarter and that it had made progress on its balance sheet, extending the maturity of $1.7 billion credit facility to June 2028.

Still, Hertz's revenue per unit fell 3% from a year earlier to $1,264, and the company cited "macro demand uncertanties" for intentionally running a tighter fleet than a year ago.

Longer-term, Ackman argues that Hertz can boost per-vehicle revenue with improvements like new technology and shorter vehicle turnaround times, becoming more like Enterprise.

But emulating Enterprise may be harder than it looks, according to Jared Ristoff, senior analyst at markets research firm IBISWorld. Nearly two-thirds of Hertz's revenue comes from its 2,000 U.S. and 1,500 international airport locations. Enterprise has just 250 U.S. airport branches, a tiny portion of its 9,500 global locations, many in urban areas where competition isn't as stiff as at airports.

Indeed, airports are one of the toughest corners of the business, says Ristoff. Airport concession fees push up costs and many travelers, choosing between side-by-side kiosks or online shopping, simply book the cheapest option. "There's higher operating costs, there's higher competition -- you have to compete on prices," says Ristoff.

Trump's tariffs, meanwhile, may cut both ways. While they could raise the value of used cars, they may also increase maintenance, repair and insurance costs, and Hertz will have to spend more on new cars as its refreshes its fleet every two to three years.

An even bigger problem: While import duties could boost used car prices over the next few years, that won't count for much if they crimp tourism or send the U.S. economy into a recession.

"I don't think car rental companies, like Hertz, have much room left to run leaner operations on the ground, and insurance costs just keep going up," says Roberto Montes, vice president of business strategy at EDS Service Solutions, a travel industry consultancy.

Montes adds he is skeptical of Ackman's target price for Hertz. A "$30 stock by 2029? That's a lot of magic, perfect scenarios, and optimism."

While Hertz's first foray into electric vehicles was a misfire, in the long run it will have to confront an even bigger technological challenge: Autonomous cars.

The cars are already operating through ride-sharing apps in several U.S. cities, including Los Angeles, San Francisco and Austin. Ackman sees a big opportunity.

"What if UBER partnered with Hertz on an AV fleet roll out over time?" he wrote on X. The idea is that Hertz could leverage its rental expertise to build a new business in a world where American vacationers are whisked around cities in self-driving cars summoned with their phones, using Hertz as a conduit.

It isn't impossible. But investors should demand that Hertz stabilize and start posting solid profits, before getting wrapped up in bold visions of the future.