There aren't a lot of IPOs I anticipate years in advance, but ever since hearing about Zipcar
What in the world is a Zipcar?
Zipcar is like a car rental club that allows you to rent a car for short periods of time. The cars are available in public places and when you go to pick up your reserved car you just flash your RFID Zipcard across the card reader on the windshield and you're off and running.
For those of us who live in urban areas that don't require a lot of driving, this is a perfect option and the fast expansion of the business shows just how popular it has become.
Since 2000 Zipcar has grown to 560,000 members in 14 major cities and 230 college campuses across the country. That growing base of users has sent revenue skyrocketing from $30.7 million in 2006 to $186.1 million in 2010. But like most fast-growing companies, that has also meant a net loss of $14.1 million last year.
One of the sales pitches for Zipcar is the "green" experience. Not only does the company provide fuel-efficient vehicles like the Toyota
Foolish bottom line
As exciting as Zipcar is, the issue for the company is the capital-intensive nature of owning vehicles. To build the business, Zipcar has also been spending increasing amounts of money on SG&A expenses, keeping it at a loss from operations. That will have to turn around for this to become a good investment long term.
Competitors like Google-
Our friends at Market Foolery are cautious on the stock right now, and considering the company's net loss, this scorching stock may have to cool off before investors should jump in. But that doesn't mean it isn't worth keeping an eye on. I've added Zipcar to My Watchlist and you can too to by clicking here.