This article is part of our Real-Money Stock Picks series.
A few forward-looking auto company stocks seem to be stalling out lately; good grief, could it be the alternator? Zipcar (NYSE: ZIP) and Tesla (Nasdaq: TSLA) both rely on consumers accepting and embracing alternatives to traditional driving habits and even car ownership itself.
Losing some zip?
Zipcar, which I purchased in January for the real-money stock portfolio I'm managing for Fool.com, plunged today after its quarterly results. Bear in mind, Zipcar's second quarter was actually pretty decent when you consider that Zipcar went public posting significant losses.
In the second quarter, Zipcar narrowed its loss to just $422,000, or $0.01 per share. That's a huge improvement from the $5.6 million, or $0.17, per-share loss it reported last year this time. In fact, Zipcar fell just a hair short of profitability in the quarter.
Revenue increased 15% to $70.8 million, and membership increased 21% to more than 731,000 members.
Zipcar had some growth initiatives to announce, too, like launching Zipvan in two more major markets (Chicago and Toronto), its launch in Austin, Texas, and its acquisition of Austria's CarSharing.at.
Still, investors balked big-time at Zipcar's weak guidance for the remainder of 2012, including lowering its revenue guidance for the year to between $272 million and $278 million from its previous expectation for $290 million to $296 million. Meanwhile, there are a few other troubling spots. Total revenue per member per period ticked down a bit in the quarter, and the company's cost per new account rose.
These are going to be meaningful metrics to watch going forward, and, in theory anyway, could be affected by rent-by-the-hour competition from the traditional rental car companies that have launched similar programs, such as Hertz (NYSE: HTZ), Avis (Nasdaq: CAR), and Enterprise. Some people think these old-school rental companies could wreck Zipcar, but taking the long-term view, I'll say not so fast.
Tesla: Too early for the test drive
Meanwhile, over in Silicon Valley, Tesla reported a pretty eye-opening quarterly loss recently, and its stock price is off its recent highs. Its second-quarter net loss widened to $106 million, or $1.00 per share. Sales dropped 54% to $26.7 million.
Although these quarterly figures were worse than analysts expected, some choppiness was expected of Tesla as it phases out its Roadster and begins delivering its anticipated Model S series. In fact, when I explained why I had decided not to buy Tesla at the end of last year, I mentioned the possibility of significant paring of the top line this year, and that's certainly coming to pass.
Although Tesla and its co-founder Elon Musk make one of the gutsiest plays out there, it also requires some pretty gutsy investors to take a stake. As for gutsy, here's a taste of Musk's aggressive agenda for Tesla, according to Fast Company: "Here's to creating the greatest car company of the 21st century, and to making a real difference in the world, and to moving us off [expletive] oil as fast as possible."
Riding the bumpy road
At some point, I'd argue that both Zipcar and Tesla will require a heck of a lot of patience and nerves of steel. Both of these companies are rabble-rousers in a tired, old industry, but then again, disruption isn't that easy or it would shake up our marketplace and shock investors a heck of a lot more often than it does.
Zipcar's brand, with its avid, or even cult-like, "Zipsters," differentiates itself from Avis, Enterprise, and the rest. That's just like how Tesla's Silicon Valley soul is nothing like Detroit's faded auto royalty GM and Ford. Both Zipcar and Tesla, in their different ways, are trying to upset the status quo in terms of how people view sustainability, expenses, and what's worth paying for when it comes to transportation.
When I first purchased Zipcar shares for the socially responsible real-money portfolio, I did think it wise to prepare for a bumpy ride, and it sure has been. Still, I'm going to continue to ride things out with Zipcar and try to enjoy the interesting trip. As for Tesla, I've tinkered with the idea of giving it a place in the portfolio many times, but even with the recent recession in Tesla's share price, I'm not quite sold on buying in yet.
In some ways, both of these companies rely on consumers greatly altering their traditional choices about transportation options. Right now, a phase of consumers having a busted "alternator" is a valid concern. That's not to say they won't alter their minds, hearts, and habits, but it may take longer than impatient investors think for these two companies to move beyond the first movers.
Would you rather your portfolio ride on more traditional auto companies? One of our top analysts has dug into what many would call Detroit's finest, Ford, complete with opportunities, risks, and a full year of updates. Click here for access to this premium research report.
