Zipcar goes public -- what should stock holder do?
June 2, 2010 12:11 PM   Subscribe

Zipcar filed the S-1 paperwork for IPO with SEC today. Family member owns a relatively significant number (to us anyways) of common shares due to prior job with the company. What happens next and what should we do?

We assume that we need to register the stock with a broker, but are unsure whether it matters which one we use? Is there a benefit to using some brokerage arms of Goldman Sachs and JPMorgan Chase?

Any ideas on estimating the value of the stock? We know how many stock we have and SEC filing has the number of expected common stock after the preferred stock has been converted, but no price range was given.

How to time (eventual) sale? Should we sell on IPO day itself or spread over time? Are there any way of getting some more stock at the IPO price for immediate flipping?

This is relatively exciting as money at even low end should be $100k+, but could obviously be much more. General rundown of the process/ tactics/ strategies would be much appreciated.
posted by anonymous to Work & Money (6 answers total) 2 users marked this as a favorite
 
Most S-1 filings go through several revisions to fill in missing holes as the date for the IPO gets closer. Most of your questions about the shares themselves will be answered in subsequent filings. However, right now there's an enormous amount of information in the incomplete filing. For instance, this is probably of interest to you: The resulting values represented the estimated fair market value of our common stock at the valuation date, which was determined to be $3.49 as of July 31, 2009. [...] the probability-weighted expected return method resulted in a common stock value of $5.27 as of March 31, 2010.

Some companies spike on IPO day and never regain that value (see The Blackstone Group), but others gain monumentally after IPO day (see Google). You will benefit from reading market analysis of Zipcar, which will become more plentiful as the IPO date nears.
posted by stoneweaver at 12:52 PM on June 2, 2010


Perhaps a stupid question, but if there is > $100,000 involved, why are you trusting strangers on the internet?

Regardless, when TZOO went public I had a whopping 12 shares. They are "held" by the company and if I want to do much of anything with them I have to transfer them to my broker... which I don't have of course.

The initial price was $6.50/share. A few years later it hit about $100 but I wasn't paying attention and missed it, so in finding a broker be prepared to discuss prices to sell at and what they expect to happen with the IPO.

That then probably guides your brokerage decisions beyond reputation. Ones in New England may be studying the IPO more than others though it sounds like a big deal so maybe everyone is, I don't know.

As far as when to sell, that's a gambling game. Their debt is $62M so assuming they'll pay it off with the $75M they're looking at $13M of raised capital. They haven't shown a profit and have indicated they expect that to continue but are sort of waiting for the market to mature. They seem to be doing well in the market though, but I'd expect the majority of investors at this point to be thinking long term. So the question becomes, do you all join them or feed them cheap stocks so they can sell them high later? If the IPO is at $5.27 will you all make enough money to be content, essentially, or do you need to gamble and sell higher at a later point in time?

As a barely related part of my job I manage the technical end of a small index of New England tech companies. We zeroed it at $100 on 1/1/2000. It's ~$75 now and has been < $100 since the .com bust. You'll hear everyone say the market should average an increase of 10%/year average but I haven't seen that with these companies. Maybe Zipcar's market segment will do better. That's another aspect a good brokerage should be able to help you with.

I'm just on the technical end with a business background, FYI. Not a finance person.
posted by jwells at 1:01 PM on June 2, 2010


IANAL, etc.

Securities registration and sales issues are incredibly complex, and there are steps that you will probably want to take ahead of the IPO so that you can (but don't have to) sell on IPO day. It is possible that your shares will need to be converted into common stock, or that they won't be convertible into common stock at all, for instance. They may be restricted, and they may require registration as an insider or majority holder. It would be impossible to know without a pretty good analysis of what you have and what ZipCar is up to.

You should absolutely talk to a broker and possibly an attorney to make sure you handle this right.
posted by JakeWalker at 1:20 PM on June 2, 2010


Sorry, majority holder should have said major holder (in other words, it's not just majority shareholders that would need to register to sell with the SEC, etc.)
posted by JakeWalker at 1:21 PM on June 2, 2010


You should talk to the shareholder relations person at Zipcar. They should help you on the process. If not, or for an alternate path, talk to a stockbroker. This is one of the few times where a full service brokerage would be helpful to you. Depending on how things are set up, there may be significant tax issues. A broker should help you figure that out, but this is a good time to talk to your accountant too.
posted by Nelson at 2:36 PM on June 2, 2010


Jake Walker is correct that this is a very complex question. You really need to retain the servicesof competent counsel to make sure you comply with the various laws to which you are subject, as well as any agreements (e.g. Lockup periods) to which the company may have subjected you.
posted by dfriedman at 2:42 PM on June 2, 2010


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