- ZIP shares hit all-time highs in the early days of the Buy Now Pay Later (BNPL) frenzy.
- Fierce competition and rising interest rates began to take its toll on multiple BNPL providers.
- Zip Co showed strong results in its latest quarterly report.
The BNPL craze swept multiple start-ups into the market, with big name financial companies following their lead. The ZIP share price hit an all-time high in February of 2021 before the BNPL bubble began to burst.
Source: ASX
The BNPL sector vaulted into the fastest growing sector in financial tech status, buoyed by consumer spending during COVID. Popularity attracted multiple start-ups with big name financial players entering the market. Regulatory concerns began to increase and tech stocks began to collapse in the face of rising interest rates. Facing these obstacles coupled with fierce competition, global investment banker Goldman Sachs sold its GreenSky BNPL operations in October of 2023, less than two years after entering the market.
Zip Co reported positive results for the first quarter of 2024 with revenues up 31.9%, resurrecting the falling stock price which began an upward rise leading to a 137.5% rise over six months. Second quarter results reported in January continued the positive trend, with revenue for the quarter up 26.1%.
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An analyst at BW Equities has a BUY recommendation on Zip Co shares, citing the company’s “strong 2024 second quarter results and the margin improvement stemming from competitors leaving the industry, leaving Zip as a growth story leveraged to a relatively strong consumer economy.”
Marketscreener.com has an OUTPERFORM rating on ZIP shares, with two of the seven analysts reporting at BUY and five at HOLD.
Nasdaq.com has an analyst consensus recommendation of BUY, with major firms Barclays, JP Morgan, Goldman Sachs, and UBS among the eight analysts reporting.
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