Depressed Zip shares bounce on November trading update

Depressed Zip (Z1P) shares have staged a much needed bounce on Tuesday following the release of a November trading update. The company’s stock rallied 9.5% as the market opened. 

For the month of November, Zip reported record transaction volumes of $906.5m, up 52% on the previous period.

What’s interesting is that Zip’s expansion markets, including Canada, Mexico, Twisto (Poland and Czech Republic), Spotti (United Arab Emirates and Saudi Arabia) and Payflex (South Africa) made a $51.6m or 5.7% contribution to total transaction volumes. 

Transaction numbers also marked record highs, up 86% to 7.5m, while customer numbers increased 71% to 9.2m.

Based on November, transaction volumes are now annualising at over $10bn, significantly higher than the $5.8bn figure in its FY21 results. 

Investors might want to note that Zip made the call to omit its revenue performance, a figure that was reported in most of its previous trading updates. 

In July, Zip unified its global brands, including US-based Quadpay, under one name. Zip was pleased to advise its brand awareness in the all-important US market is now “at higher levels than pre Zip rebrand”. 

On the M&A front, Zip successfully completed its Twisto acquisition in November, providing a regional HQ and a ‘passport’ for European expansion. 

Managing director and global CEO Larry Diamond said November was a very strong month for the company with many new markets processing BNPL payments for the first time. 

Back to square one

Zip shares have gone full circle, trading at roughly pre-covid levels. Fierce competition in the BNPL sector, a recent risk-off attitude towards tech stocks and the prospect of rising interest rates has weighed.

Interestingly, there’s a consensus Buy recommendation on Zip with a potential upside of 55% its current share price.