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What: Shares of car-sharing pioneer Zipcar
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 Motley Fool owns shares of Zipcar. Motley Fool newsletter services have recommended buying shares of Zipcar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.