Zip Co Limited (ASX:ZIP) shares have experienced a significant rally following the announcement of strong annual earnings and plans for a secondary listing on the Nasdaq. The buy-now-pay-later (BNPL) firm’s strategic moves have resonated positively with the markets, driving the share price to new highs.
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The announcement on August 22, 2025, triggered a surge of over 25% in Zip’s share price, reaching its highest level in more than three years. This upward trajectory reflects renewed confidence in the company’s growth prospects and strategic direction.
Zip reported a substantial increase in cash earnings before taxes, depreciation, and amortisation (EBTDA), more than doubling to A$170.3 million for the year ending June 30. A key driver of this growth was a 41.6% increase in total transaction volume (TTV) within its U.S. operations. The company’s focus on non-discretionary spending in the U.S. market appears to be paying dividends.
The decision to pursue a secondary listing on the Nasdaq is aimed at tapping into the growing investor interest in the U.S. market. This move could provide Zip with greater access to capital and increased visibility among a wider pool of investors.
Further bolstering its market position, Zip expanded its integration with Google on August 12, 2025. U.S. shoppers can now access Zip’s installment payment options directly through Chrome’s autofill feature during online checkout. This integration streamlines the payment process and has the potential to significantly increase transaction volumes.
However, not all news has been positive. In December 2024, co-founder Larry Diamond stepped down from his roles as director and U.S. chair. While he remains a committed shareholder and adviser, the announcement initially led to a 1% dip in the share price.
Earlier in April 2025, Zip partnered with GameStop to become its primary pay-in-installments service in the U.S. Despite this strategic alliance, the share price declined by 16% over the week, potentially influenced by broader market volatility and economic uncertainties.
Financial results released in January 2025 also presented a mixed picture. Zip reported a 50.2% increase in cash EBTDA to $35.3 million for the second quarter of FY 2025. However, the share price fell nearly 20% as revenue margin slipped to 7.9% from 8.2% and cash transaction margins dipped slightly.
Analyst Summary: Bull and Bear Cases
Bull Case:
- Strong earnings growth driven by US operations.
- Nasdaq listing to increase capital access and visibility.
- Google Chrome integration enhances user experience.
Bear Case:
- Margin compression poses a threat to profitability.
- Leadership transition introduces uncertainty.
- Susceptible to broader market volatility and economic conditions.
Zip’s recent performance demonstrates a company navigating a dynamic market. The strong earnings growth and strategic initiatives, particularly the U.S. listing plans, are creating positive momentum. However, the company also faces challenges related to margin pressures and leadership transitions. The markets will be closely watching whether Zip can sustain its growth trajectory and effectively manage these challenges.
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