Automotive News reports that budding car share company Zipcar is looking to raise as much as $75 million in an Initial Public Offering (IPO). Zipcar, which rents cars by the hour mainly in 13 heavily populated urban areas around the globe, has reportedly never turned a profit in 10 years of business. The filing with the U.S. Securities and Exchange Commission shows that Zipcar intends to use the money to pay down debt and increase the company's fleet size.
The company did post first quarter revenue of $33 million, up 29 percent from 2009, yet its loss ballooned from $3 million in '09 to $5 million this year. In spite of the losses, Zipcar has continued to grow as the company acquired Streetcar Ltd in April to gain a foothold in London, England. Further expansion into Europe is planned in part due to an investment in Catalunya Carsharing, the largest car sharing company in Spain.
Analyst Jim Hall of 2953 Analytics says that Zipcar may have an opportunity to expand beyond the big cities, but the company will need to "learn vehicle usage cycles for different markets all over the country and all over the world." That expansion may mean Zipcar will need to overstock its inventory of vehicles, which could cut into future profits.
[Source: Automotive News sub. req. | Image: Rakka, CC2.0]