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Zipcar's (ZIP -1.5%) first-mover advantage should enable it to benefit from the eventual shift...

Zipcar's (ZIP -1.5%) first-mover advantage should enable it to benefit from the eventual shift to car-sharing from car-ownership in urban areas, Cowen's Jim Friedman writes in initiating coverage at Outperform. "While Zipcar’s valuation is high, we believe the long term growth rate and margin expectations implied by the current share price are achievable."
Comments (1)
  • Christopher Grey
    , contributor
    Comments (117) | Send Message
    Whether or not people really make a mass shift from car ownership, leasing, renting, public transportation, walking, bicycling, skateboarding, scooters, or the many other options available to this one option of car sharing really isn't the issue at all. The whole concept of first mover advantage in a business that has no intellectual property, which this doesn't appear to have, is nonsense. If car sharing really is the future, there will be thousands of companies as well as the big rental car companies themselves trying copy this business model. Margins will get compressed. Market share will be hard to acquire or maintain. The valuation still won't make sense. Zipcar's valuation only can make sense if they have some kind of intellectual property, such as a special reservation and communications system that makes payments, booking, and sharing a lot more efficient, that other companies don't have and will have trouble replicating. The company has been around for 10 years and still loses money in a business that isn't even capital intensive. What does that tell you about how great the business really is? Hint: It isn't a great business.
    24 May 2011, 04:01 PM Reply Like
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