Zipcar (NYSE: ZIP) Zips Out of the IPO Block

Movers & Shakers

Thursday's most active stocks were led by Zipcar (NYSE: ZIP), which zipped out of the blocks on its first day of trading. We take a closer look at this little winner.

Our founder earned clients a 23% average annual return over five years as an equity analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers: NYSE: ZIP, NYSE: HTZ, Nasdaq: SBAC, NYSE: WSC, NYSE: R, Nasdaq: RCII, NYSE: AER, Nasdaq: UHAL, NYSE: DTG, NYSE: URI, NYSE: CAR, NYSE: GMT, NYSE: TGH, NYSE: RRR, NYSE: TAL, NYSE: AYR, Nasdaq: MGRC, NYSE: CAP, Nasdaq: ELRC, NYSE: FLY, NYSE: BOX, Nasdaq: MRLN, Nasdaq: MIND, Nasdaq: WLFC, AMEX: ACY, Nasdaq: PEDH, NYSE: NEP, Nasdaq: ACOR, Nasdaq: CHINA, AMEX: BAA, Nasdaq: RPRX, Nasdaq: BCAR, Nasdaq: YRCW, Nasdaq: OTIV, NYSE: SVU, NYSE: CEU, NYSE: SCOK, Nasdaq: CIGX, Nasdaq: LLEN, Nasdaq: ONSM, Nasdaq: ESLR, Nasdaq: ADES, Nasdaq: QIHU, Nasdaq: OXBT, Nasdaq: COOL, Nasdaq: CBMX, Nasdaq: MOBI, Nasdaq: YOKU, Nasdaq: FFHL, Nasdaq: SGRP, Nasdaq: ENG, Nasdaq: STRM, Nasdaq: KONE, NYSE: KFS, Nasdaq: CALI, Nasdaq: PSOF, AMEX: CUO, Nasdaq: INUV, Nasdaq: PAAS, Nasdaq: CHMP, Nasdaq: RXII, Nasdaq: BBXT, Nasdaq: FFBH, NYSE: CBR, Nasdaq: PERF, Nasdaq: UFPI, NYSE: SRZ, NYSE: CDE, AMEX: STS, NYSE: LEE, Nasdaq: PFED, Nasdaq: RADA.

Zipcar (NYSE: ZIP) Zips Out of the IPO Block

Zipcar priced its initial public offering (IPO) at $18 a share, which was the maximum it registered to reach. Demand for the shares proved even hotter on the open market, as the somewhat revolutionary rental car company intrigued seekers of disruptive technology.

If you don't understand why, look at the long-term charts of Netflix (Nasdaq: NFLX), Google (Nasdaq: GOOG), Amazon.com (Nasdaq: AMZN) and dare I forget, Apple (Nasdaq: AAPL). You know Wal-Mart (NYSE: WMT) and Home Depot (NYSE: HD) once fit into this group as well. The best fitting one word description for such deliverers of disruption is winner!

Zipcar calls itself a car-sharing company, but it looks to us like a rental car company with a novel idea. Zipcar members can rent a shared vehicle for as short as an hour, making them extremely convenient for city dwellers in need of a puddle jumper™ for a short hop, or move, or a date even. Whether Zipcar's novel approach allows it to steal more market share or not will depend on the strategic reactions of embedded renters, Hertz (NYSE: HTZ), Dollar Thrifty (NYSE: DTG) and Avis Budget (NYSE: CAR). Non-profit car-sharing programs are not going to be able to compete, based on capital constraints.

Zipcar has taken the hassle out of renting a vehicle. There's none of that nonsense about insurance or gasoline (sort of) to worry about. You're not going to run up the cost of rental by running a couple hours late either. Zipcar makes it easier, and Americans like easy. Therefore, it is the real deal as far as disruptive technology goes. And knowing the established firms all too well, it's my best guess they'll be late to change and so some will go by the way of Borders and Blockbuster.

And I disagree with some who say there are no barriers to entry and that there is therefore no first-mover advantage. Zipcar is established in the hearts, minds and parking lots of the college crowd, young Americans, adopters of new technology. Zipcar is in the limited space of metropolitan residential and commercial parking lots, like many of its established rivals, but ahead of any new entrant. It's got important locations locked up near mass transit hubs.

Brand loyalty is not likely strong with rental firms, at least not in my case from my personal dealings. In fact, I would like to stick it to a few by taking advantage of Zipcar, and I bet there are a lot of Americans who feel the same way. Haven't you ever booked a car with one unmentioned poorly run rental firm, and shown up to find a group of people like yourself all waiting for overbooked vehicles (Upper East Siders know exactly which place in the 80s I'm talking about)? It's happened to me more than once! Or, haven't you ever been charged an extra day for ten minutes by any of the established firms?

Trading in ZIP was not allowed to begin until after 11:00 AM, when the shares first traded hands on the open market at a price of $29, 61.1% above the IPO price. Pumped paper profits allured Zipcar shareholders to flip away, and so the shares eased lower from the open, closing at $28, still marking a 56% first day gain. Not a bad birthday zippy!

Zipcar raised over $174 million Thursday, which the company will put promptly to use in expansion efforts. Pre-IPO, ZIP only operated in 14 major metropolitan areas, and more than 230 college campuses across the U.S, U.K. and Canada. Hot market demand helped the stock close at a point that values the company over a billion dollars, based on market capitalization. That's a better opening day value then Amazon.com (Nasdaq: AMZN), which accomplished a market cap of $438 million.

The company is not yet profitable, though it boasts profitability within its early markets, which we assume include Boston, New York and Washington D.C. Therefore, we cannot compare it to industry rivals based on P/E or PEG based comparisons. We estimate it trades somewhere near 5.8X its 2010 sales. Hertz trades at 0.9 times its trailing twelve month sales, and the Rental and Leasing Services Industry trades at approximately 1.41X. The problem with this comparison, though, is that ZIP is an aggressive growth company, while the establishment operate like cash cows (fat slow ones). The established have been growing through merger recently, and we suspect they will be shrinking through market share purging.

Jim Cramer notes his observation of a day-two follow through for hot IPOs. I'm just looking at Zipcar for the first time this evening, and S-1s are long, and time is short ahead of the start of the third period of the Flyers / Sabres series opener. If we were going to spend a few more days on this, we would want to look at the market opportunity, which the S-1 indicates is growing pretty darn rapidly. In fact, the market growth rate is 44% annually, if my back of the envelope estimate is right and the third party forecaster found in the S-1 is right. The problem is that this is the projection for the entire market, and the company itself tempers the third party growth estimate to 26% annually (that's still hot), projecting the $3.3 billion market to mature in 2020 instead of 2016.

It would take a few days of data review, interviews, analysis, forecasts and estimates to develop a DCF model worthy of trust here. So, let's just say that at this level of familiarity with ZIP, I would not be a buyer here without some more due diligence, though I would have wanted in on the IPO (thanks a lot for remembering me Wall Street). You can make up for it with Flyers tickets. Analysts covering ZIP or corporate representatives are welcome to send me a report to look over so I might update my view.

Article interests investors in Zipcar (NYSE: ZIP), Hertz (NYSE: HTZ), SBA Communications (Nasdaq: SBAC), Wesco (NYSE: WSC), Ryder (NYSE: R), Rent-A-Center (Nasdaq: RCII), Aercap (NYSE: AER), AMERCO (Nasdaq: UHAL), Dollar Thrifty (NYSE: DTG), United Rentals (NYSE: URI), Avis Budget (NYSE: CAR), GATX (NYSE: GMT), Textainer (NYSE: TGH), RSC Holdings (NYSE: RRR), TAL International (NYSE: TAL), Aircastle (NYSE: AYR), McGrath Rentcorp (Nasdaq: MGRC), CAI International (NYSE: CAP), Electro Rent (Nasdaq: ELRC), Fly Leasing (NYSE: FLY), SeaCube Container (NYSE: BOX), Marlin Business Services (Nasdaq: MRLN), Mitcham (Nasdaq: MIND), Willis Lease Finance (Nasdaq: WLFC) and AeroCentury (AMEX: ACY).

The day's other biggest gainers included Peoples Educational (Nasdaq: PEDH), China North East Petroleum (NYSE: NEP), Acorda Therapeutics (Nasdaq: ACOR), CDC Corp. (Nasdaq: CHINA), BANRO (AMEX: BAA), Repros Therapeutics (Nasdaq: RPRX), Bank of Carolinas (Nasdaq: BCAR), YRC Worldwide (Nasdaq: YRCW), On Track Innovations (Nasdaq: OTIV), SuperValu (NYSE: SVU), China Education Alliance (NYSE: CEU), SinoCoking Coal (NYSE: SCOK), Star Scientific (Nasdaq: CIGX), L&L Energy (Nasdaq: LLEN), Onstream Media (Nasdaq: ONSM), Evergreen Solar (Nasdaq: ESLR), ADA-ES (Nasdaq: ADES), Qihoo 360 (Nasdaq: QIHU), Oxygen Biotherapeutics (Nasdaq: OXBT), Majesco (Nasdaq: COOL), CombiMatrix (Nasdaq: CBMX), Sky-Mobi (Nasdaq: MOBI), Youku.com (Nasdaq: YOKU). The biggest losers included Fuwei Films (Nasdaq: FFHL), SPAR Group (Nasdaq: SGRP), ENGlobal (Nasdaq: ENG), Streamline Health (Nasdaq: STRM), Kingtone Wireless Info (Nasdaq: KONE), Kingsway Financial (NYSE: KFS), China Auto Logistics (Nasdaq: CALI), Pansoft (Nasdaq: PSOF), Continental Materials (AMEX: CUO), Inuvo (Nasdaq: INUV), Pan American Silver (Nasdaq: PAAS), Champion Industries (Nasdaq: CHMP), RXi Pharmaceuticals (Nasdaq: RXII), BankAtlantic (Nasdaq: BBXT), First Federal Bancshares of Ark (Nasdaq: FFBH), Ciber (NYSE: CBR), Perfumania (Nasdaq: PERF), Universal Forest (Nasdaq: UFPI), Sunrise Senior Living (NYSE: SRZ), Coeur d'Alene Mines (NYSE: CDE), Supreme Industries (AMEX: STS), Lee Enterprises (NYSE: LEE), Park Bancorp (Nasdaq: PFED) and Rada Electronics (Nasdaq: RADA).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Skype IPO S-1 Registration with SEC

While you hedge fund guys slept-in out there in the the Hamptons (year right!) and left operations to your CFO, you might have missed a sleepy little news bit on an otherwise naked wire Monday. Remember Skype, the company that made a couple dudes rich and cost eBay some time? It may be offering an opportunity now for those who might see the potential if the right creative minds were in command. Much of the market is looking at Skype in a different way, as a sort of lost cause, with that old Vonage (NYSE: VG) stigma. It's too small and too radical to make a difference against huge competitors that can shift to crush it. They see Skype as a story that can only make a few pennies giving away services to the tech-savvy and cheapsters among us looking to save a nickel here or there. To most, Skype was a nice idea, but is in a competitive pool with bigger fish. But the Street may be missing something, perhaps a sleeping giant catfish even.

Many of you may not know that "The Greek" spent a portion of his analytical career researching IPOs, and they were mostly of the tech sort. "The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street.

(Tickers: NYSE: VON, NYSE: VZ, NYSE: S, NYSE: T, NYSE: CVC, Nasdaq: CMCSA, NYSE: TWC, Nasdaq: EBAY, Nasdaq: GOOG, Nasdaq: MSFT, Nasdaq: AAPL, NYSE: Q, NYSE: NTE, NYSE: VOD, NYSE: NTT, NYSE: FTE, NYSE: DCM, NYSE: TI, NYSE: TEF, NYSE: BT, NYSE: OTE, NYSE: BCE, NYSE: CTL, NYSE: CHT, NYSE: DTV, NYSE: VIA, NYSE: VIA-B, Nasdaq: DISCA, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: ICE, NYSE: NYX, Nasdaq: NDAQ)

Skype IPO S-1 Registration with SEC

Monday's wire somehow managed to hide a little secret. Skype filed its S-1 IPO registration with the SEC on August 9. You may not know it, but I use to write research reports on IPOs in the aftermath of the dot-com bubble burst. I was covering mostly tech-offerings, since that's what dominated the wire, until the IPO market dried up and we moved to other projects. The stock-drop of the earlier part of this decade forced my old firm to kill a long-standing and widely loved newsletter, Emerging Opportunities, which focused on our favorite small-cap stock picks and about four IPO write-ups a quarter.

I was pretty good at quickly recognizing the paradigm shift taking place in my stock group coverage, and transitioned the buy list from tech-heavy never-to-be-nothings into undervalued growth stocks (that some called value stocks) selling tangible goods and services with real profits to show for it. My stock picking performance might have been lousy that first year after inheriting the small-cap tech-heavy group in the midst of the bubble burst, but instead I quickly proved my worth with some hot-shot off-beat picks that made our clients millions and boosted our overall performance record. My old clients, colleagues and the CEOs of my picks would vouch for it, if you needed to know and I needed you to know.

Anyway, I am feeling the IPO research itch again, and am going to pick up with an analysis of the Skype IPO for you. Let me know if you are interested in having the report mailed to you when published (if you're not already on our mailing list).

Skype's sort of testing interest, using major players Goldman (NYSE: GS), JP Morgan (NYSE: JPM) and Morgan Stanley (NYSE: MS) to sell its shares. The company is only looking at raising about $100 million. Remember, this is the company eBay bought for $2.6 billion in 2005, and turned around and sold 70% of in 2009 for $1.9 billion plus some promises. I wonder if this IPO might be a farce, sort of a feeling out of the marketplace and a reminder to the players that be that Skype is still around. The buyers of the 70% stake, excluding the founders - who took a 14% interest, were a savvy group led by Silver Lake. We'll see soon enough, as an IPO registration does not necessarily lead to an IPO. It would be interesting if the threat of IPO alone were to drive a higher buyer to take interest. Or it simply may be that the new owners want to see how a larger offering might swing.

Anyway, I'll refrain from further writing until I've concluded my research; then I'll have a lot to say, and something worth reading too. For now, I just wanted you to be aware of the news and pending research. You can find some of our most recent stock research here.



Monday's corporate news schedule highlighted presentations by EMC (NYSE: EMC) and Citrix Systems (Nasdaq: CTXS) at the Pacific Crest Securities Technology Leadership Forum. The day's earnings schedule highlighted reports from King Pharmaceuticals (NYSE: KG), Tyson Foods (NYSE: TSN), Scripps Networks (NYSE: SNI), Acadia Pharmaceuticals (Nasdaq: ACAD), Anika Therapeutics (Nasdaq: ANIK) and Avi BioPharma (Nasdaq: AVII).

Monday's EPS reports included Advocat (Nasdaq: AVCA), Allied Nevada Gold (AMEX: ANV), Alumina (NYSE: AWC), Ambac (NYSE: ABK), Amedysis (Nasdaq: AMED), America First Tax Exempt (Nasdaq: ATAX), American Dairy (NYSE: ADY), American Oriental Bioengineering (NYSE: AOB), American Science and Engineering (Nasdaq: ASEI), Answers (Nasdaq: ANSW), Applied Energetics (Nasdaq: AERG), Arcadia Resources (AMEX: KAD), Array BioPharma (Nasdaq: ARRY), Ascent Media (Nasdaq: ASCMA), Assisted Living Concepts (NYSE: ALC), Athersys (Nasdaq: ATHX), Ballantyne Strong (AMEX: BTN), Baltic Trading (Nasdaq: BALT), Banks.com (AMEX: BNX), Beacon Power (Nasdaq: BCON), Bidz.com (Nasdaq: BIDZ), Blackboard (Nasdaq: BBBB), Blount Int'l (NYSE: BLT), BMP Sunstone (Nasdaq: BJGP), Bovie Medical (AMEX: BVX), Breeze-Eastern (AMEX: BZC), Broadwind Energy (Nasdaq: BWEN), Capstone Therapeutics (Nasdaq: CAPS), Capstone Turbine (Nasdaq: CPST), Carrols Restaurant (Nasdaq: TAST), Century Casinos (Nasdaq: CNTY), China Automotive (Nasdaq: CAAS), China Fire & Security (Nasdaq: CSFG), China Natural Gas (Nasdaq: CANL), China XD Plastics (Nasdaq: CXDC), China-Biotics (Nasdaq: CHBT), ChinaCast Education (Nasdaq: CAST), Chindex (Nasdaq: CHDX), Clayton Williams Energy (Nasdaq: CWEI), Clean Energy Fuels (Nasdaq: CLNE), Clear Channel Outdoor (NYSE: CCO), Clinical Data (Nasdaq: CLDA), Coeur d'Alene Mines (NYSE: CDE), Compass Diversified (Nasdaq: CODI), Composite Technology (Nasdaq: CPTC), Connecticut Water (Nasdaq: CTWS), Convergys (NYSE: CVG), Converted Organics (Nasdaq: COIN), Cousins Properties (NYSE: CUZ), CPEX Pharmaceuticals (Nasdaq: CPEX), Crawford & Co. (Nasdaq: CRDB), Ctrip.com (Nasdaq: CTRP), CytRX (Nasdaq: CYTR), DISH Network (Nasdaq: DISH), DTS, Inc. (Nasdaq: DTSI), Ebix (Nasdaq: EBIX), Echostar (Nasdaq: SATS), Emeritus (NYSE: ESC), Energy Transfer Equity (NYSE: ETE), Energy Transfer Partners (NYSE: ETP), Enterprise GP (NYSE: EPE), eResearch Technology (Nasdaq: ERES), EV Energy Partners (Nasdaq: EVEP), First Citizens Banc (Nasdaq: FCZA), Fisher Communications (Nasdaq: FSCI), Freddie Mac (OTC: FMCC.OB), Fuel Tech (Nasdaq: FTEK), Full House Resorts (AMEX: FLL), FX Energy (Nasdaq: FXEN), G. Willi-Food (Nasdaq: WILC), Genco Shipping (NYSE: GNK), Geokinetics (AMEX: GOK), Giant Interactivey (NYSE: GA), Gladstone Capital (Nasdaq: GLAD), GLG Partners (NYSE: GLG), GLG Life Tech (Nasdaq: GLGL), Golden Star Resources (AMEX: GSS), Grand Canyon Education (Nasdaq: LOPE), Granite City Food & Brewery (Nasdaq: GCFB), GSE Systems (AMEX: GVP), GTx, Inc. (Nasdaq: GTXI), Gulf Resources (Nasdaq: GFRE), Harbin Electric (Nasdaq: HRBN), Harvest Natural Resources (NYSE: HNR), Hawaiian Electric (NYSE: HE), Healthcare Realty Trust (NYSE: HR), HearUSA (AMEX: EAR), Heckmann (NYSE: HEK), Heritage Fin'l (Nasdaq: HBOS), Himax Tech (Nasdaq: HIMX), Horsehead Holding (Nasdaq: ZINC), Hospitality Properties Trust (NYSE: HPT), Houston Wire & Cable (Nasdaq: HWCC), HQ Sustainable Maritime (AMEX: HQS), Image Metrics (Nasdaq: IMGX), Industrial Services of America (Nasdaq: IDSA), Inergy (Nasdaq: NRGP), Inergy LP (Nasdaq: NRGY), UTEK (AMEX: INV), Integrated Electrical (Nasdaq: IESC), Inter Parfums (Nasdaq: IPAR), Iridium Communications (Nasdaq: IRDM), Isis Pharmaceuticals (Nasdaq: ISIS), Keryx Biopharmaceuticals (Nasdaq: KERX), Kohlberg Capital (Nasdaq: KCAP), KSW (Nasdaq: KSW), Landry's (NYSE: LNY), Lexicon Pharmaceuticals (Nasdaq: LXRX), Liberty Media (Nasdaq: LINTA), Lion's Gate Entertainment (NYSE: LGF), LJ Int'l (Nasdaq: JADE), Loral Space & Communications (Nasdaq: LORL), Macerich (NYSE: MAC), MarkWest Energy (NYSE: MWE), MBIA, Inc. (NYSE: MBI), McDermott Int'l (NYSE: MDR), Medcath (Nasdaq: MDTH), Medical Action (Nasdaq: MDCI), Medivation (Nasdaq: MDVN), Mindray Medical (NYSE: MR), Motorcar Parts (Nasdaq: MPAA), MPG Office Trust (NYSE: MPG), MTR Gaming (Nasdaq: MNTG), MYR Group (Nasdaq: MYRG), Nelnet (NYSE: NNI), NGP Capital Resources (Nasdaq: NGPC), Northern Oil Gas (AMEX: NOG), Nuance Communications (Nasdaq: NUAN), Old Point Fin'l (Nasdaq: OPOF), On Track Innovation (Nasdaq: OTIV), Ophthalmic Imaging (Nasdaq: OISI), Optimumbank Holdings (Nasdaq: OPHC), Orbcomm (Nasdaq: ORBC), Osteotech (Nasdaq: OSTE), Paragon Shipping (Nasdaq: PRGN), Parexel (Nasdaq: PRXL), PDC Energy (Nasdaq: PETD), Pegasystems (Nasdaq: PEGA), Pericom Semi (Nasdaq: PSEM), PICO Holdings (Nasdaq: PICO), Pinnacle Bancshares (Nasdaq: PCLB), Poniard Pharma (Nasdaq: PARD), Presstek (Nasdaq: PRST), Primoris (Nasdaq: PRIM), Progenics (Nasdaq: PGNX), Qiagen (Nasdaq: QGEN), Quicksilver Gas (NYSE: KGS), Quicksilver Resources (NYSE: KWK), Quinstreet (Nasdaq: QNST), Rackspace Hosting (NYSE: RAX), RADNET (Nasdaq: RDNT), Regency Energy (Nasdaq: RGNC), RenaSola (NYSE: SOL), Repros Therapeutics (Nasdaq: RPRX), Salem Communications (Nasdaq: SALM), Salix Pharma (Nasdaq: SLXP), Sanders Morris Harris (Nasdaq: SMHG), SciClone Pharma (Nasdaq: SCLN), Southwest Gas (NYSE: SWX), Southwest Water (Nasdaq: SWWC), SRI Surgical (Nasdaq: STRC), Starwood Property Trust (Nasdaq: STWD), Sterling Construction (Nasdaq: STRL), Stifel Fin'l (NYSE: SF), Stonemor (Nasdaq: STON), Sun Hydraulics (Nasdaq: SNHY), Superior Well Services (Nasdaq: SWSI), Synta Pharmaceuticals (Nasdaq: SNTA), Synutra (Nasdaq: SYUT), TechTarget (Nasdaq: TTGT), THQ (Nasdaq: THQI), Toreador (Nasdaq: TRGL), Tower (Nasdaq: TWGP), Transcept Pharma (Nasdaq: TSPT), Transmontaigne (NYSE: TLP), TravelCenters of America (AMEX: TA), US Energy (Nasdaq: USEG), Unigene Labs (Nasdaq: UGNE), United Capital (AMEX: AFP), Universal Display (Nasdaq: PANL), Uranium Resources (Nasdaq: URRE), Vantage Drilling (AMEX: VTG), VCG Holding (Nasdaq: VCGH), Verenium (Nasdaq: VRNM), ViaSat (Nasdaq: VSAT), Viasystems (Nasdaq: VIAS), Walter Investment (AMEX: WAC), Wave Systems (Nasdaq: WAVX), Wellcare Health (NYSE: WCG), Westway Group (Nasdaq: WWAY), Wonder Auto (Nasdaq: WATG), Xinyuan Real Estate (NYSE: XIN) and Xoma (Nasdaq: XOMA).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.