Zipcar zooms 60% higher in IPO

SAN FRANCISCO (MarketWatch) — Zipcar Inc. shares shot up more than 60% in their stock-market debut Thursday, marking the latest splash in what is already shaping up to be a strong year for IPOs.

At last check, Zipcar’s newly minted shares (NASDAQ:ZIP)  were up $11 at $29.
Late Wednesday, Zipcar had priced its initial public offering at $18 — above the previously expected range of $14 to $16 a share — to raise more than $170 million.

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Many of Zipcar's hundreds of Chicago-area cars, like this Honda Civic, are parked near mass transit and commuter-rail stations.

About 9.68 million shares were sold in the offering, which was underwritten by Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.
Zipcar is one of many companies going public in a resurgent year for public offerings. According to a report this week from Hoover’s Inc., 28 companies went public in the first quarter, raising $12 billion in market capitalization. That’s more than twice the $4.5 billion raised through IPOs in the first three months of 2010.
Zipcar operates a so-called car-sharing service in 14 cities and at more than 230 college and university campuses across the U.S. and U.K. It offers self-service cars for use by the hour or by the day, and claims 560,000 members. The company has more than 8,000 vehicles, including popular choices like the Mini (PINK:BAMXY)  and Toyota’s (NYSE:TM)  Prius, usually in pairs and located in high-foot-traffic areas and near mass transit
“Zipcar has almost a cult following,” said Scott Sweet, senior managing partner at IPO Boutique. “They’re strategically located in big cities where parking is tough, as well as many universities.”

Zipcar in IPO-market driver's seat

How will the car-sharing firm fare in a high-gas-price environment? Stacey Delo talks to MarketWatch's Dan Gallagher.

To this point, however, profits have been elusive. In the most recent quarter, the company reported a net loss of $1.1 million, on revenue of $52.1 million, compared with a profit of $1.3 million, on revenue of $35.8 million for the year-earlier period, according to an SEC filing. Read related analysis on Zipcar’s valuation .
Matt Therian of the research firm Renaissance Capital explained earlier this week that Zipcar has a relatively “capital intensive” business model, but its strong brand image and its head start in the car-sharing market — where it competes in some markets with for-profit rivals and such nonprofit entrants as Chicago’s iGo and the San Francisco area’s City CarShare, in addition, of course, to traditional rental incumbents like Hertz (NYSE:HTZ)  and Avis Budget Group (NASDAQ:CAR)  — give it an inside track with investors.
“If investors perceive a company as a game changer, they don’t worry so much about a valuation that might look expensive one or two years down the road,” Therian said.
IPO Boutique’s Sweet has compared Zipcar to OpenTable Inc. (NASDAQ:OPEN) , a provider of online restaurant-reservation services that went public in May 2009. Like Zipcar, OpenTable offered a service that was popular with a typically urban and relatively youthful consumer base, and that in turn drove interest among investors. That stock priced at $20. Its intraday high Thursday is $106.10