Zip Co shares (ASX: ZIP) closed the week at A$2.07 after bouncing firmly off the psychologically critical A$2 level, offering bulls their first meaningful foothold following a bruising third-quarter. As modest as the move is compared to the recent move lower, there are signs that buyers may be willing to step in and provide a floor.
The Zip share price rounded out the week with a gain of 4.02%, snapped a run of sustained selling pressure that saw the stock fall 37.35% in calendar Q3. The bounce came after the stock briefly touched A$2 intraday, a level that bulls will be looking to defend into the final stretch of 2026. Down 56.88% over the past 12 months, bears certainly have the upper hand for now.
Recent Financials Supportive
The recent set of full-year FY26 financials represent the strongest in Zip’s history. The company reported cash earnings before tax, depreciation, and amortisation (cash EBTDA) of A$268.9 million, a 57.9% increase on the prior corresponding period. Revenue climbed 24.7% to A$1.336 billion, while net profit after tax rose 45.7% to A$116.4 million. Operating margins expanded from 15.8% to 20.0%, and management have guided for more of the same acceleration into FY27, with cash EBTDA forecast at A$340 million and operating margins projected in the 20% to 22% range.
The results mark the twelfth consecutive quarter of positive cash flow generation, a streak that management and analysts alike have pointed to as evidence of a structural, rather than cyclical, turnaround in the business. Alongside the results, Zip launched a A$50 million on-market share buyback program, which has been actively executed through September and provides a degree of mechanical price support at current levels.
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Strategically, the United States business remains the company’s primary growth engine. U.S. transaction volumes surged more than 42% year-on-year in U.S. dollar terms, reflecting the scale Zip has built in the world’s largest retail market. Adding a forward-looking dimension to that growth story, Zip US completed an integration with Stripe’s Shared Payment Tokens platform, linking its flexible buy-now-pay-later offering with AI-driven checkout infrastructure and agentic shopping tools. The move positions Zip as an early-mover in AI-native retail commerce, a channel that is attracting significant attention across the payments and fintech landscape.
What Lay Ahead
Looking to the analyst community, all 12 covering the stock carry Buy or Strong Buy ratings, with price targets ranging from A$3.50 at Macquarie, which holds an Outperform rating, to A$4.70 at UBS, which has cited the stock’s defensive BNPL characteristics as an underappreciated quality in the current environment. The average price target on the street at A$4.28 suggests a perceived upside of more than 100% from here, with analysts clearly at odds with price action.
From a macro perspective, Zip’s US concentration also exposes the business to the American consumer credit cycle. Any deterioration in employment conditions, a tightening of consumer spending, or a regulatory shift around flexible credit products could weigh on both volumes and bad debt provisioning. The company’s operating margins, while expanding, leave limited buffer should funding costs rise or credit losses accelerate beyond current assumptions.
ZIP’s gain over the past week is a win for beleaguered bulls, but with a 37% quarterly drop still fresh in the memory, there remains plenty of work in order to shift momentum.
