With rising competition and an unproven business model, the company is far from a safe bet at this point. Yet the stock is selling for just 1.25 times trailing revenue, which is close to an all-time low. Revenue growth has fallen, but seems to have leveled out at a solid 15%. ![]() Still, it's not out of the question for a company that has aggressive global growth plans.īut even if you don't think Zipcar will hit that ambitious target, the stock still could make for a solid investment for growth-minded investors who don't mind taking on some risk. Considering Zipcar grew its membership base by 5% from the second to the third quarter this year, that represents a bit of a stretch. Membership levels that rose by just 6% sequentially each quarter would be enough to hit the figure by the fourth quarter of next year. And it wouldn't take crazy growth for Zipcar to get there in 2013. Grabbing that millionth member next year would be a difficult but important milestone. Zipcar needs more improvements like these to keep the service a compelling value for new and existing members.Īnd the reward for maintaining a great service should be record membership levels. The company expects to have all the major markets in North America covered with cargo van service in 2013. After a limited test run in Seattle, Los Angeles, Philadelphia, and Portland, Ore., the profitable van service is being rolled out on a much larger scale. The company's cargo van lineup is a good recent example. car2go allows members to leave their cars anywhere within a zone, instead of requiring that they return the vehicle to a single assigned space as Zipcar does.īut Zipcar can play the innovation game too. And the car2go business is an innovative spin on car sharing that has some real advantages over the Zipcar model. Hertz, for example, has the benefit of a huge fleet to draw from and is targeting many of the same densely populated markets. ![]() These competitors are mounting a serious challenge, after all. Zipcar's best hope at fending off rising competition from the likes of Hertz and Daimler 's car2go service is to keep its own service fresh with continuous innovation. Any success Zipcar has here would make funding its expansion plans that much easier. Management seems to have taken this lesson to heart, and the company is putting a new focus on generating referrals and using affiliate networking to boost subscriber rolls. If Zipcar's loyal membership base is a real competitive advantage, then cheap, word-of-mouth marketing should help customer acquisition costs stay near historic lows, and not closer to new highs. But the company's new member acquisition cost has been as low as $45. Shareholders were cheered when last quarter reversed that awful trend. But the second-quarter costs were inflated by an expensive marketing experiment that was an absolute bust. It's true that that figure is down from the $89 it cost to acquire each new subscriber in the second quarter. Zipcar's member acquisition costs fell to $70 per subscriber in the third quarter. ![]() Here are a couple of issues that I see the company needing to meet head-on. So Zipcar needs to notch a few key wins to help December's bounce become a long-term trend. But investors are still looking at a 35% loss on the year. These positive results have helped the stock rebound from its lows. Launching in Miami, the company's 20 th major metropolitan market. Growing revenue by 15%, and earnings to $0.10 a share in the third quarter. But that's impressive nonetheless, given that Zipcar is still aggressively expanding its business.Īnd the car-sharing service collected some other trophies to put on its 2012 mantle.Those include:Įxpanding its member base to nearly 800,000 - up from 673,000 last year. Yes, that profit level will be tiny - the company expects total net income of just $1 million to $4 million. ![]() The stock is up about 40% after announcing last month that 2012 should mark its first full year of profitability.
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