Zipcar, the popular hourly and daily car rental service, is going public, and taking a place in the stock market is a move that may actually be beneficial to consumers.
Zipcar is aiming for a $75 million initial public offering (the exact date of the IPO hasn’t been disclosed), but when any privately-run company goes public, the need to meet Wall Street’s requirements and expectations often comes with some positive side effects. Here are some of the beneficial changes that renters using Zipcar may expect to see in the near future.
More Consumer Control
Potential new investors will be considering Zipcar’s ability to satisfy consumers and how well the company can grow and profit before they place their bets and buy shares.
If consumers don’t get the services and pricing they want, they could vote with their dollars and simply take their money elsewhere. As a result, the company’s profits would fall, causing shareholders’ confidence in their investments to drop as well, potentially leading them to sell their shares.
As a private company, Cambridge, Mass.-based Zipcar has been facing a class-action lawsuit accusing it of charging excessive hidden fees, notes Boston.com.
If Zipcar had been publicly traded when the suit was filed, the company’s stock could have tanked, which would have put more pressure on the company to be clearer about its billing practices than if it was a privately-owned.