(1) PROFITABILITY. When can this company turn profitable? Of course, growth is essential at this stage and requires leverage, so I think that profitability is not a relevant question now. But when should we see the oss rate drop to zero? I think 5 years is ok. The essential question is accelerating GROWTH
(2) GROWTH. The main thing to look for here is an acceleration of growth. The 5% q 2 q membership growth seems weak. I like to see a >40% annual growth rate for a booming concept company. So > 10% q 2 q subscription growth is a goal. If Zip does not achieve that in a year or so, I fear it will fall prey to COMPETITION.
(2) COMPETITION: frankly, everyone and his mother is into this business. More to come. It reminds me of early days of pc's. Is zip an Altair or an Imsai? Or is it Atari or is it Apple? It does remind me of Apple..someone said the "hipster" factor..that's what Apple had from the get go. But it's too early to tell. It isn't even obvious that one company will dominate in this space. At the moment, with the recent IPO, Bloomberg, etc., Zip is the flash..will it remain a sustained light in the space?
(4) DOWNSIDE: I read somewhere (NY Times, I think) that the insurance liability for a member is capped at $300K. That's just too little, and we may read of a member having a wreck and ending up bankrupt. This means members would need to carry their own liability insurance. This could sink ZIP and I would hope management is addressing it asap. Does Zip offer a liability upgrade? Hertz seems to think of car share as an offshoot of rentals, most of their clients are car renters who also own cars and have their own liability insurance. In any case, this is a spooky downside issue to me. Also..the hip factor demands cool cars, like electrics (I detest Coopers) and not clear Zip has enuf of those.
(5) The general economy and market and demographic trends: I think all of these (except for a major Depression..unlikely) favor ZIP. The migration back to the city, the rise of youth culture.. the people who want a cleaner greener planet..all of this favors zip. I would think a ZIP truck biz in the burbs would work for Sunday afternoon carpenters, gardeners, etc. This is a major driver and all boats will rise.
It's a risky investment, but has a lot going for it. If it succeeds, the fortunate investor who holds and survives could see 1000% or more in pps appreciation. Next 2 years are really critical, and the growth rate is key.
All of this is IMO. I don't own shares yet but I am considering starting a modest position.