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What is it about Americans and their cars?
For decades, owning a car has been central to American identity, almost like a national birthright. Car ownership, like home ownership, was seen as a symbol of having achieved the American Dream.
Along the way, Americans got hopelessly addicted to fossil fuels, costing taxpayers billions of dollars annually in subsidies and direct purchases, not to mention the various other undesirable costs to the environment.
So it's nice to see an American company that champions car non-ownership receive a hearty welcome from the capital markets.
Zipcar, the decade-old car-sharing company, went public Thursday on the Nasdaq, raising $174 million and watching its stock price soar a whopping 60 percent in its first day of trading. Clearly, there is investor demand for this company. The successful IPO also represents a healthy sign for the overall IPO market, which is starting to heat up following the worst economic downturn in generations.
On Wednesday, Zipcar priced its IPO at $18 a share, higher than the $14 to $16 the company had previously announced. On Thursday morning, Zipcar (ZIP) shares opened at $30 per-share, a 60 percent advance, before settling back down at about $28, still up over 50 percent for the day. Nearly 10 million shares were snapped up by investors.
At that price, Zipcar is now a $1 billion company by market capitalization. Zipcar's lead underwriters were Goldman Sachs and J.P. Morgan Chase.
Based in Cambridge, Massachusetts, Zipcar operates a fleet of more than 8,000 vehicles in 14 cities and more than 230 colleges in the United States, the United Kingdom and Canada, according to the company. (Disclosure: I am actually one of Zipcar's 560,000 members. I have used the service once. It worked as advertised.)
It's really pretty simple. You join the service. They give you a keyless entry Zipcard. You take the Zipcard to the nearest parking lot with Zipcars, use the card to unlock the car, and drive away. The company has hourly and daily rates that compare very favorably to the legacy rental car giants like Hertz and Avis.
Perhaps the only unfortunate aspect of the whole Zipcar scenario is what the company calls its members -- "Zipsters" -- but given the impressive performance on the Nasdaq, we'll give them a pass on that one.
Zipcar's lack of profits is not so easy to overlook. The company had a net loss of $14 million on revenue of $186 million last year, according to the company's IPO prospectus filed with the Securities and Exchange Commission. This isn't the first time this year that a company has gone public despite lacking profits.
But Zipcar has a lot going for it, not least of all a business model that is much more efficient than that of the legacy rental car giants. (I was in Detroit recently, and there were vast parking lots of rental cars, as far as the eye could see, just sitting there unused.) In truth, the rental car industry in this country is ripe for disruption, which may help explain why investors greeted Zipcar so warmly on Thursday.
Zipcar also has a fairly deep bench of executives, starting with Chairman and CEO Scott Griffith. The company was founded by Robin Chase, the well-known entrepreneur who, among other things, is a vocal supporter of net neutrality.
In an e-mail to Wired.com, a Zipcar spokesperson said the company is in a "quiet period," and thus could not comment on the IPO.
Photo: Zipcar demonstration in New York's Times Square.
See Also:
- ZipCar Adds A Few Cars With Cords
- Zipcar iPhone App Makes Car-Sharing A Breeze
- Zipcar Arrives in iPhone's App Store
- Zipcar Founder Tells How GoLoco Will Make Carpooling Hip, Too
- Zipcar and Flexcar to Merge
- Car-Sharing Goes Online
- New York Startup Brings Sharing to Cycling
- Car Rental Industry Undergoing Overhaul
