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ZIP: the new form of transportation

|Includes: Avis Budget Group, Inc. (CAR) — Zipcar, ZIP, known for their affordable and flexible rental car hours opened at $30 a share on the NASDQ market. The company had an initial price offering of $18 a share which was already well above its expected $14 to $16 a share for the IPO Market. Zipcar is a capital intensive business with more than 8,000 vehicles around the United States. The most active areas are metropolitan including Manhattan, Boston and Chicago where enrolled users pick up the car located in public parking lots and pay by the hour with insurance and gas included. 

This company was founded in 2000 and based in Cambridge, Mass and has not yet been profitable which is what’s so interesting with the high initial price per share. The company posted a net loss of $14.7 mill in 2009 and a loss of $4.7 mill for 2009. But, revenue is growing. With the constant advertisement and exposure, sales have grown 41.9 % to $186.1 mill last year. The proceeds from the IPO will be used to pay down debt and general business expenses.

To get started, you have to pay an enrollment and application fee together totaling $85 and you are free to rent a car for roughly $8 an hour or pick a daily rates as well. I think the convenience of a Zipcar and how easy it is to access a car for whenever you need it will keep this company ahead of competition. Hertz, in 2008, started its own car sharing program Connect but does not have it as widely available as Zipcar. Also, Zipcar rents out cooler cars like Mini Cooper’s… So you can save and look chic.