Zipcar went public last week, and how. On its first day of trading, the company raised $174.3 million and finished up 56 percent. All told, Zipcar sold 9.7 million shares of stock at $18 a pop and earned itself a market value of $1.21 billion, according to Bloomberg. Car-sharing has not yet saved the world, but it sure got paid.
The beauty of Zipcar is its simplicity. An annual membership fee ($60 in New York) grants access to a fleet of cars that can be booked online and used for a low hourly rate ($8.50 to $13.50). The 11-year-old company currently operates in 14 cities — 12 in the United States, plus Vancouver and London — and 230 college campuses. Its fleet stands at around 8,000 cars, and its membership at 560,000.
Robin Chase, the company’s founder, has been known to say: “Infrastructure is destiny.” The business world is more concerned with whether profits are destiny. So far, for Zipcar, they have not been. Last year the company generated about $186 million in revenue but still posted a net loss of roughly $14 million. While Zipcar has done well in its four established markets (Boston, New York, Washington, and San Francisco), its prospects outside major cities are less certain.
Zipcar’s biggest problem, writes the Wall Street Journal, may be growing competition from traditional car rental companies. The car-sharing arm of Hertz, called Connect, can draw on a car fleet that dwarfs Zipcar’s and offers many more locations — especially near airports. The Boston Globe doubts Zipcar will become “a great business or a compelling stock,” in part because keeping up with the Hertzes will require substantial overhead costs that could weaken profitability.
In the end Zipcar’s success may hinge on how transportation evolves in the near future. An old (the oldest?) article on Zipcar in the New York Times archive says 40 percent of new members planned to get rid of their cars. They could do that if tomorrow’s travel truly involves systems of interconnected transportation modes, rather than single methods of point to point travel. In a systems world, car-sharing would act as a critical cog. Whether or not infrastructure becomes that world is, as Ms. Chase might say, a matter of destiny.
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