Zip obliteration: Why the BNPL darling is down 35% today

Zip (ASX: ZIP) is facing a savage selloff, with the stock opening 23% lower and now down 38% to its lowest level since May 2025. The first-half FY26 result missed on both revenue and earnings, while US transaction volumes and new customer additions also disappointed.

Growth rates read well at face value but fell short of what analysts were expecting.

• TTV up 34.1% to $8.38bn vs. $8.43bn ests (1% miss)

• Revenue up 29.2% to $658.1m vs. $667.2m ests (1% miss)

• Cash EBTDA up 85.6% to $124.3m vs. $130.3m ests (5% miss),

• Underlying NPAT of $52.4m vs. loss of $1.6m a year ago

Net bad debts came in at 1.7% of TTV, above UBS expectations of 1.63%, with write-offs climbing from 1.34% in the December quarter to 1.65% in the March quarter. The fact that net bad debts haven't stabilised is not a good look. The US segment was another sore point, with UBS expecting 4.77 million active customers and TTV growth of 46%, against actuals of 4.63 million and 44.7% respectively.

Guidance was broadly positive but not enough to offset the disappointments elsewhere.

• FY26 operating margin guidance upgraded to greater than 18.0% from 16.0-19.0% prior

• FY26 group cash EBTDA as a % of TTV lifted to greater than 1.4% from greater than 1.3%

• US TTV growth of greater than 40% reaffirmed, with January tracking above that threshold

An unforgiving reporting season

A 38% selloff is severe, but this reporting season has shown little mercy for companies that miss. Zip may be on track for the largest single-day result reaction among S&P/ASX 200 companies, though the magnitude is not entirely out of step with recent precedent.

• Temple & Webster fell 32% on 12 February after its 1H26 result missed consensus, with margins hit by increased discounting and promotional activity

• AMP tumbled 26.6% on 11 February despite a broadly in-line result, as weak margins in its Platforms and Super divisions disappointed

• Pro Medicus dropped 23.8% on 12 February after a soft 1H26 result, though analysts attributed much of the miss to contract timing

Where to from here?

Earnings misses rarely end well. Analysis of the past 16 reporting seasons from 2008 to 2024, compiled by Bell Potter's Richard Coppleson, shows stocks that miss expectations fall an average of 6.3% on results day, with the damage compounding to an average decline of 8.4% four months later.

That said, Zip is starting to look more interesting on valuation. UBS forecasts earnings of 9 cents per share in FY26, putting the stock at 19x forward estimates – not an unreasonable multiple for a company still growing at this pace.