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Hertz Drops Following Its Reduction in Outlook on Revenue

Hertz Global Holdings has dropped the most in the past six week on Monday after the business lowered its outlook for revenue from U.S. rental cars due to an oversupply of vehicles pressuring prices.

Annual revenue, which is measured through available car days will remain unchanged to 1.5% lower than one year ago, compared to an outlook it released earlier of 1.5% to 2.5% growth, said the company in a prepared statement on Monday.

Hertz, based in Estero, Florida, said that it is expecting to report that revenue for the first quarter on that basis dropped by between 2.5% and 3.5%.

CEO John Tague in a prepared statement said that pricing pressure experienced in the latter part of 2015 had intensified further during the 2016 first quarter.

He added that the company beliefs that industry capacity would likely moderate with an improvement from seasonal demand which will set the stage for the company’s peak season to be better during the summer.

Shares of Hertz were down 8.1% in early New York trading to $8.90 after dropping up to 8.4% prior to the opening bell. The drop was the biggest intraday slide since February 24. The overall drop in share price since January 1 of 2016 is 32%.

The company announced that it is expecting adjusted profit for the full year to be between 95 cents and $1.10 per share. Analysts had estimated on average that the adjusted profit for the company would come in at $1.04 per share.

Hertz also has reconfirmed its outlook for annual earnings prior to any taxes, interests, amortization and depreciation of between $1.6 billion and $1.7 billion.

This past February, Hertz reported earnings for the fourth quarter that were higher than estimates on Wall Street as the company’s fleet management and cost cutting efforts started to bear fruit despite prices being hit from an increased amount of competition.

On Monday, Hertz also reaffirmed its earlier expectation for incremental savings of $350 million this year.

Hertz has seen increased competition from not only other rent a car agencies but due to the increase in popularity of the ride hailing and ride sharing apps such as Uber and Lyft amongst others.

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