Shares of car-sharing service Zipcar (Nasdaq: ZIP) were back in the repair shop this week after a disappointing earnings report. The stock dropped more than 10% Wednesday, and reached record lows under $12 Thursday.

Poor guidance appears to be the culprit, as the company actually beat earnings estimates, posting an $0.08 EPS loss on expectations of an $0.11 shortfall, but second-quarter projections of $71 million to $74 million in revenue and breakeven net income were behind analyst predictions. As a recent IPO with a growth rate of just 20%, Zipcar's push into positive numbers may be a little tepid for some investors who are used to seeing new stocks explode out of the gate. Still, I think the sell-off seems overdone.

Zipcar's a big-picture story. The bull argument comes with a belief in the power of car sharing as a disruptive innovation, even though that could take years to play out. Profits would be nice of course, but the winter months are Zipcar's slowest and management has still projected net income around $5 million for the year. Also, in its established markets -- Boston, New York, San Francisco, and Washington, D.C. -- profits continue to grow at a brisk pace and operating margins increased to 21% this quarter. More than half of its revenue comes from those markets, and the fat margins seem to indicate that growth initiatives are eating into profits rather than incompetence or a faulty business model.

In the last quarter, the company invested $8.7 million in Wheelz, a peer-to-peer car sharing service; expanded its Zipvan cargo fleet in Boston and Washington, D.C.; and formed a partnership with Honda (NYSE: HMC) as a preferred vehicle manufacturer, which will add some of the carmaker's hybrid and electric vehicles to Zipcar's fleet.

Some see increasing competition as a potential flat tire for Zipcar, but Hertz's (NYSE: HTZ) move into car sharing with its on-demand service feels a little like Blockbuster jumping into the DVD-by-mail business invented by Netflix. Sure, Hertz can offer car sharing, but Zipcar's model is built for that business and if the whole industry's moving in that direction, the innovator will win. Having 1,000 cars at the airport turns into an albatross rather than an advantage. Furthermore, Hertz is loaded with debt, as is fellow traditional player Avis Budget (Nasdaq: CAR), which is looking into car sharing as well. Despite being around for generations, both companies still have negative retained earnings (they're still in the red after all these years). Shares of both companies have jumped more than 5% since Zipcar's report.

The threat from peer-to-peer service also looms, but I think GM-backed (NYSE: GM) RelayRides tripped itself up in an effort to expand nationally this year. Before, the service used Zipcar-like technology to enable members to borrow neighbors' cars, but now it often requires renters to get the keys from the owner. This takes much of the convenience and coolness out of the service, and makes it feel more like a glorified listserv. I'd like to see P2P succeed, but when I tried renting a car from RelayRides recently, the car owner never responded to my email and my reservation expired after eight hours leaving me scrambling to find a car for the next day. That doesn't seem like a formula for success.

For now, Zipcar's clearly got its work cut out, but I'm not too worried about any of the other car-sharing pretenders.               

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Fool contributor Jeremy Bowman holds no positions in the companies mentioned in this article. The Motley Fool owns shares of Zipcar, Hertz Global Holdings, and Motley Fool newsletter services have recommended buying shares of Netflix,, Zipcar, and General Motors. The Motley Fool has a disclosure policy.
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