Zipcar plunges after cutting 2012 revenue forecast

[August 04, 2012]  NEW YORK (AP) -- Zipcar Inc. shares tumbled to an all-time low Friday after the car-sharing network reported lower-than-expected revenue in the second quarter and cut its annual estimates.

THE SPARK: Zipcar reported a smaller loss for its second quarter, but revenue fell short of Wall Street estimates. The company also offered a disappointing outlook for the third quarter and cut its revenue forecast for the full year.

Zipcar said its revenue grew 15 percent to $70.8 million in the second quarter, but FactSet reports that analysts expected $73.1 million. The company said revenue in the third quarter should be between $74 million and $77 million while Wall Street was forecasting $81.4 million.

For the full year, Zipcar now says its revenue will be between $272 million to $278 million, down from its previous estimate of $290 million to $296 million. Analysts were projecting $290.9 million on average.

THE BIG PICTURE: The Cambridge, Mass., company said it gained fewer new members than it expected in the second quarter in both the U.S. and the U.K. As a result, revenue growth did not meet its estimates. In response, Zipcar said it is making it easier for members to give referrals to potential new members, expanding its partnership programs, is increasing its social media plans and expanding online media tracking.

Zipcar said it canceled a radio advertising campaign after disappointing early results.

THE ANALYSIS: Cowen & Co. analysts Kevin Kopelman and Andrew Marok downgraded the shares to "Neutral" from "Outperform." They said the company's new plans should lead to improved growth, but it's not clear how long that will take.

SHARE ACTION: Zipcar stock plummeted $3.69, or 34.7 percent, to $6.94 in morning trading. Earlier the shares fell to a low of $6.50. Zipcar shares are down 54 percent over the last 12 months. Zipcar's April 2011 IPO priced at $18, and the shares traded as high as $31.50 on their first day of trading.

[Associated Press]

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