Home / Sector / BNPL shares / It’s been a big month for the Zip (ASX:Z1P) share price

It's been a big month for the Zip (ASX:Z1P) share price

It's been a rollercoast month for this BNPL player

Posted by
Nikhil Gangaram
Nikhil Gangaram is currently studying dentistry, however, his first love is the stockmarket which he believes to be the greatest wealth generator in the world. Nikhil has extensive experience in financial markets with a background in economics and having worked as an Australian equities trader for a proprietary firm. His investment philosophy has developed from being a short-term speculator to building long-term and sustainable portfolio returns. Nikhil hopes to help readers become better investors by focusing on stock selection and risk management.
Published
| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The ZIP Co Ltd (ASX: Z1P) share price is up almost 29% in the past month. But it hasn't all been smooth sailing. 

Shares in the buy-now-pay-later (BNPL) company started June at around $6.93, before rallying to a high of $9.11 late in the month. Zip shares then took a sharp dive before finding a base at $7.20.

Since then, the Zip share price has bounced more than 20%, including a 13% rally yesterday.

Scared looking people on a rollercoaster ride representing the volatile Mineral Resources share price in 2022

Image source: Getty Images

Why did the Zip share price surge yesterday?

The Zip share price surged more than 13% yesterday, hitting an intra-day high of $9.00 before closing at $8.78.

There was no news out of the company that could explain the bullish price action. Instead, investors may have been flocking on the back of speculation that a rival BNPL provider acquired a strategic stake in the company.

According to an article in the Australian Financial Review, Swedish backed BNPL provider Klarna reportedly took a 4% stake in Zip to consolidate its market share. Klarna is part-owned by the Commonwealth Bank of Australia (ASX: CBA).

Neither Zip nor Klarna responded to the speculation.

Strength in the ASX tech sector

Despite not releasing any price sensitive news within the past 2 months, Zip shares have experienced some volatile movements.

Given the lack of news, overall strength in the tech sector and the company's growth in the second half of FY21 could explain the share price movements.

In the third quarter of FY21, Zip saw record group quarterly revenue of $114.4 million, which was an increase of 80% year on year. Quarterly transaction volume also increased 114% to $1.6 billion.

Zip highlighted its US division, with transaction volume in the region growing 234% to $762 million.

The Zip share price was also on the receiving end of negative broker coverage in late June. According to a note from analysts at Citi, Afterpay Ltd's (ASX: APT) expansion in the US market could put pressure on Zip's US-based QuadPay business.

Despite the volatility, the Zip share price is still trading around 60% higher since the start of the year.

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on BNPL shares

Little girl looking down trying to zip up her pink windcheater.
BNPL shares

Zip share price dips amid cap raise rumours

| Bronwyn Allen

The Zip share price closed 4.95% lower during a crummy day for the market.

Read more »

Woman looking at her smartphone and analysing share price.
BNPL shares

This ASX All Ordinaries stock is down 40% in a year, and the chair is buying up big

| Bronwyn Allen

Over the past three months, he's spent more than half a million dollars of his own money buying more Humm…

Read more »

Three United States flags and a Wall St sign outside the US financial building.
BNPL shares

Guess which ASX All Ords share is planning a Nasdaq listing

| James Mickleboro

Sezzle has its eyes on a US listing to expand its investor base.

Read more »

woman paying using paypal
BNPL shares

Zip share price gains amid global asset sale

| Bronwyn Allen

Zip has begun the process of selling off assets after announcing it will cease operations in six more international regions.

Read more »

illustration of laptop with down arrow and the word zip representing zip share price going down.
BNPL shares

Why did the Zip share price crash 26% in February?

| Bernd Struben

The Zip share price fell 26% last month, as the ASX BNPL stock faced headwinds from three fronts.

Read more »

woman thing about her payment
BNPL shares

Why is Choice gunning for ASX BNPL companies like Zip?

| Bronwyn Allen

The Federal Government wants to make a decision on new regulations for BNPL companies by the year's end.

Read more »

unhappy investor considering computer screen
BNPL shares

Are Zip shares finally cheap enough to buy following last week's 12% dive?

| Sebastian Bowen

Even though Zip shares look cheap, there are a few red flags to consider...

Read more »

a young woman sits with her hands holding up her face as she stares unhappily at a laptop computer screen as if she is disappointed with something she is seeing there.
BNPL shares

Zip share price lower on $243m first-half loss

| James Mickleboro

Zip is still making large losses but is heading in the right direction...

Read more »