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Zipcar, Inc. (ZIP) Message Board

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  • markdumasjr markdumasjr May 18, 2012 1:38 PM Flag

    The Big Problem

    Barriers to success are large...? I guess you think ZIP is successful...please explain, as the market disagrees with understanding is that the company is nearly 10 years old and that from a net perspective, over those 10 years, they have lost a considerable amount of money...

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    • This is a complicated, logistically challenging business model so it will be difficult to make a profit. In businesses like these the first to scale up operations can often make most if not all of the profits the sector offers.

      Start-ups lose money. Zipcar has altered its strategy and swaped out management over the past 10 years so it is not necessarily the best time period to judge them over. More recently they have marched towards overall profitibility while individual markets have a growing, positive contribution to overhead. If/when newer markets approach the contribution of the mature markets (which are still growing very rapidly) then there is no reason an overall profit cannot be earned.

      How does the market disagree with me? The shares trade at a price that puts a value on the entire organization. That value fluctuates. What price indicates success or lack thereof?