Small caps last week: Hertz's dark day, Wendy’s meme rally, OpenAI IPO beneficiaries

This past week, Hertz stock suffered the worst day in its history after the firm flagged weaker demand, while retail investors sent Wendy's soaring 40%. Meanwhile, with OpenAI and Anthropic having confidentially filed to go public, Oninvest identified three smaller names that could benefit from the potential IPO of each of the AI race leaders. These are the top small-cap stories for June 22-26 in our weekly recap.

One of the world's largest car-rental companies, Hertz, warned of "unexpected softness" in demand while simultaneously announcing a capital-raise plan that Bloomberg described as unusual. The stock plunged around 41% on Wednesday, marking the largest single-day decline in the company's history, Barron's noted.

Weakness in the used-car market left the management expecting adjusted corporate EBITDA of $50-80 million in the second quarter, toward the lower end of analysts' expected range. Investors were also unsettled by the company's plans to issue $100 million of stock and $300 million of payment-in-kind notes, Barron's reported. Hertz will loan shares to underwriter JPMorgan so investors can establish short positions to hedge purchases of the notes. The company will receive only a lending fee from the arrangement, which will be used to repay debt. As of March 31, Hertz had total debt of $18.2 billion and revenue of $2 billion.

Mark Hackett, chief market strategist at Nationwide, said the debt offering reflected the need for drastic measures: "it may signal capitulation of those that had been holding on."

Shares of fast-food chain Wendy's surged more than 40% in early trading on Wednesday, before ending the session up 25.5%. The rally was fueled by enthusiasm among retail investors. Wendy's became one of the most-discussed stocks on Reddit after losing around half its value over the last 12 months, with social-media users urging each other to "save Wendy's before it's too late."

The surge in interest echoed previous meme-stock episodes, including GameStop. Wendy's had all the ingredients that typically attract meme-stock traders, Barron's noted: a recognizable brand, a relatively modest market valuation, and a large online community ready to rally behind the stock. Wall Street, however, remains cautious. Seventeen coverage analysts rate the shares a "hold," while another five recommend "buy," and five "sell."

As the market prepares for the public listings of ChatGPT developer OpenAI and its main rival, Anthropic, the company behind Claude, interest in AI infrastructure continues to grow. Oninvest analyst Aldiyar Anuarbekov has picked three publicly traded companies that are already benefiting from the expansion of OpenAI's ecosystem.

Boundless Bio, a micro cap developer of novel cancer therapies, announced on Tuesday that it would merge with privately held biotech Serapha Bio, pay a dividend, and raise $230 million from healthcare investors. For Boundless, the merger with Serapha Bio, which is developing a therapy for a rare genetic disorder in which the liver produces a defective form of the AAT protein, provides a path forward after early clinical data failed to support continued development of its cancer therapy. The combined company will operate under the Serapha Bio brand, and its shares will trade on the Nasdaq under the ticker symbol AATD.

Boundless shares jumped as much as 87% on Tuesday to their highest level since late 2024. The rally came despite a broader selloff in U.S. equities, with all major indexes closing lower on Monday. Wall Street coverage of the company is limited to two analysts, and both rate the stock a "hold."