Zipcar Ready to Take Off

Former Caligiuri Investments Stock

Back on April 14th, 2011 I blogged about Zipcar after its IPO.  Clickhere to see the original write-up.  A couple predictions I made for Zipcar were:

1.  "Because Zipcar is a relatively young company, it has yet to turn a profit.  This will no doubt be a concern for many investors, however I believe that Zipcar will be profitable in the long-term."

2.  "If I had to guess, Zipcar will receive immense interest from outside companies such as Ford and Toyota."

3.  "In the end, I believe that this will be at least a multi-billion dollar company."

Prediction Number 1 = Correct


"I believe that Zipcar will be profitable in the long-term."

Zipcar has indeed finally turned a profit.  Turning a profit is kind of important (joke), so this is huge.  On November 2nd, 2011 Zipcar released its earnings report showing its profitability.  Scott Griffith, Chairman and CEO of Zipcar, said, "We are delighted to report a strong quarter of growth and profitability."  Click here for the article.

Despite the profit hurdle finally being passed, we should not be surprised if Zipcar fails to report profits for certain quarters in the short run.  Like all great companies that have come before it, Zipcar is aggressively spending money to grow its business.  Now that we have seen Zipcar turn a profit, we should have more confidence in the long-term plan of the company.

Prediction Number 2 = Correct


"If I had to guess, Zipcar will receive immense interest from outside companies such as Ford and Toyota."

Zipcar and Ford struck a deal.  Below is a brief excerpt from the New York Times describing the deal.  For the complete article, click here.

"[Ford] will supply its vehicles to Zipcar locations on 250 college and university campuses in the United States.  The two-year program will provide Zipcar with up to 1,000 Ford Focus sedans and Escape sport utility vehicles."

This was not only a sweet deal because Zipcar received a bunch of free cars, but it also shows that Ford recognized Zipcar as the market leader.  In other words, Ford could have chosen to provide Hertz with free cars (a competitor to Zipcar in the car sharing industry), but it chose Zipcar.  CEO Scott Griffith said it best:

"Having Bill Ford and the Ford Motor Company validating Zipcar as a business model and as an emerging transportation brand is a big step for us."

Prediction 3 = Hopefully Correct!


"In the end, I believe that this will be at least a multi-billion dollar company."

The third prediction I made was that Zipcar would be at least a multi-billion dollar company, I.E. a multi-billion dollar market capitalization.  Right now, Zipcar's market capitalization is $724 million, so a multi-billion dollar market cap would mean triple digit returns for investors.

Now is the Time to Buy

I've been following Zipcar since April and think that now is a great time to buy into what I believe to be a future multi-billion dollar company.  Remember, own at least 15-25 companies in a portfolio and don't allocate too much to any one stock.  

Michael R Caligiuri owns shares in Zipcar

Zipcar has IPO: 56% Increase

For more information on Zipcar's IPO, please click this link.

Zipcar Overview

Zipcar is an innovative rental car company that has sparked the interest of many investors.  To me, it seems like the Netflix of the rental car industry.  The Zipcar business model is incredibly convenient for customers, which I think will ultimately result in customer retention and loyalty.

How does Zipcar work?

1. Join: 
• You pay an initial fee to have a Zipcar membership.  You will receive a "Zipcard" that will function as a key.
2. Reserve: 
• Sign up for a time-slot when you need a car.  You can also choose to reserve a car for a full day.  Hourly rates are usually $9, while a full day will cost about $70.  It's important to note that gas and insurance are included.
3. Drive:
• Your Zipcar will be ready for you at a parking spot close to your location.
4. Return:
• Return the car back to the original parking spot. 

Final Thoughts

Zipcar has what I love, an innovative and patented business model that "smells right."  Because Zipcar is a relatively young company, it has yet to turn a profit.  This will no doubt be a concern for many investors, however I believe that Zipcar will be profitable in the long-term.  If I had to guess, Zipcar will receive immense interest from outside companies such as Ford and Toyota.  In the end, I believe that this will be at least multi-billion dollar company.

I would advise investors not to invest in this company until more information about its financials are released.