Zipcar Expands New York Footprint On Way To $18

by Trefis Team
-14.41%
Downside
12.25
Market
10.48
Trefis
ZIP
Zipcar
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Zipcar has expanded its car-sharing network to city of White Plains, outside the city of New York, starting with locations that get heavy foot traffic. This expansion extends Zipcar services in New York City, one of Zipcar’s largest markets, further into the tri-state area.

The car sharing service provides its members, which include residents and local businesses, a cost-effective alternative to car ownership through its hourly rentals that include gas, parking, insurance and roadside assistance costs. It competes with traditional rental companies and their car-sharing services like Hertz On Demand, Enterprise’s WeCar, UHaul’s UCarShare and City Car Share, as well as peer-to-peer (P2P) services like RelayRides and GetAround.

See our complete analysis for Zipcar’s stock

With close to 700K members, Zipcar currently operates in 16 markets, including Boston, Washington D.C., New York, San Francisco, Los Angeles, Chicago, Toronto and London, along with over 250 university campuses across the U.S. In the U.S., it dominates the car sharing market with more than half-a-million members.

Our current $18 price estimate assumes Zipcar Membership in North America will reach 1.4 million by 2018 at double digit sales growth. We expect the company to grow its membership by increasing penetration levels in the big metropolitan markets, launching services into new markets as well as by offering more flexible monthly membership fee options.

Our estimate relies on a recent RAND report that estimates that the U.S. car sharing market could expand to 7.5 million users over this decade. In case the car-sharing industry manages favorable policy support from the government, the market could even expand to 20 million members in a maximum adoption scenario, in which case our price estimate might turn out to be conservative. According to Frost & Sullivan research, car-sharing membership is expected to reach 4.4 million in North America by 2016.

While the recent aggressive entry by competitors threaten to chip away Zipcar’s market share, we believe Zipcar has enough room to grow and a bet on Zipcar is a bet on the successful adoption of car-sharing in large urban areas as an alternative to car ownership.

We have a $18 Trefis price estimate for Zipcar, significantly above the current market price.

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