Zipcar Fails to Accelerate

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The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Isaac Pino and research analyst Lyons George discuss topics across the investing world.

In today's edition, Isaac and Lyons look at a growth company that's not quite hitting on all cylinders -- Zipcar. An avid user of Zipcar, Isaac follows the trends in the car-sharing market closely and believes Zipcar has the best overall business model. Yet after it announced first-quarter earnings, the company received a rude awakening from the markets. Zipcar's stock was off more than 10% on the day due to only modest growth and a slightly revised profit outlook. The three major concerns in Isaac's eyes are not-so-impressive growth in core cities, potentially only one new European city launch in 2012, and the entrance of a barrage of competitors, including Daimler's car2go service. If Zipcar can maintain a high retention rate, currently around 98%, the company's brand will remain the best in this growing industry. Watch this metric closely going forward. 

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At the time this article was published Isaac Pino owns shares of Zipcar. Lyons George has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford, Hertz Global Holdings, and Zipcar.Motley Fool newsletter services recommendFord, General Motors, and Zipcar. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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