The coronavirus and its aftermath have dealt devastating blows to a number of companies and industries. Some of these were already struggling due to secular and cyclical forces, while others are suffering due to their dependence on travel or foot traffic.

Companies that are in both categories are most at risk like Hertz Global (HTZ  ). Since the market peak in late-February, Hertz's stock is down more than 85%. The S&P 500 (SPY  ) is down about 15% in that period. Hertz has also not participated in the market rebound since March 23, as it's down more than 40% from these levels, while the S&P 500 is up nearly 25%.

Tough Environment

The car rental business has always been tough due to the number of competitors and cost of employing a large number of workers for customer service, maintenance, and operations. These factors keep margins tight, and the business exposed to cyclical factors.

Therefore, ride-sharing apps have created even more competition for travelers in recent years. Additionally, these companies have much less costs and higher margins than car-rental companies as their drivers are independent contractors who use their own cars. With their billions in venture funding, they have been operating at losses in order to grow their market and win market share.

Millennial and Generation-Z are much more likely to use ride-sharing rather than renting cars on vacation. For a while, it seemed that car-rental companies would still be able to profit form longer-term rentals, however Uber (UBER  ) and Lyft (LYFT  ) are encroaching on this as well by offering rentals to its users through its app with one-click. This is also going to eat away market share from the entrenched players.

Another negative development for Hertz is that a large percent of its value is its inventory of cars. The coronavirus will certainly lead to a big drop in car sales and create a glut which will negatively impact the value of used cars.

Recent Developments

These developments have put the company on the brink of bankruptcy. Revenues are down, its assets are worth less, and the debt is still the same. Earlier this week, Hertz was negotiating with creditors to avert a bankruptcy filing. The company missed a payment last week and is looking to streamline its $17 billion in debt. Notably, its entire market cap is $433 million.

In recent days, Hertz entered into forbearance and limited waivers with its lenders that gives it until May 22 to develop a financing strategy and better structure. It seems that time is now Hertz's enemy given that only a passage of time and improvements in public health and attitudes about travel are necessary are the ultimate means to improve its situation.