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What: Shares of car-sharing pioneer Zipcar (NAS: ZIP) skidded into a ditch today, falling as much as 39% in intraday trading after the company reported second-quarter results.
So what: Let's start with the good news. Zipcar's revenue grew 15% year over year to almost $71 million, driven by 21% growth in membership. The company also zoomed closer to profitability with a quarterly net loss of $422,000, versus $5.6 million last year.
Unfortunately, that wasn't good enough. Wall Street analysts had been expecting a breakeven quarter and $73 million in revenue, so, growth notwithstanding, the numbers from the second quarter were largely seen as a disappointment. What's worse is that the company admitted that it has had trouble attracting new members and faced headwinds in the U.K. arm of the business. Those struggles no doubt played a part in the company's more conservative third-quarter revenue outlook of $74 million-$77 million. The average analyst estimate for the upcoming quarter was $81.5 million.
Now what: For a young company like Zipcar, investors are looking for growth, growth, and more growth. As such, the admission that growth has been elusive is a troubling thing for them to hear. On the flip side, it's important to remember that Zipcar is a young company in a young industry, so it will be key for investors (if they want to stick around) to watch how the management team addresses the speed bumps the company has hit.
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The article Why Zipcar's Shares Got Crushed originally appeared on Fool.com.
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