Evaluation of Zip shares occurs after a remarkable quarter in the ASX 200

2 min read | October 30, 2024 03:14 PM AEDT | By Team Kalkine Media

Google News:

Evaluation of Zip shares occurs after a remarkable quarter in the ASX 200 — Image source: Shutterstock

Recent News

Santos (ASX:STO) After the Takeover Collapse: Bargain or Value Trap?

Why Pro Medicus (ASX:PME) Is Leading the Growth Stock Conversation

Is 360 (ASX:360) Amid ASX 200 Revealing Growth’s New Reality?

Why 360 (ASX:360) ASX 200 Is Facing a New Growth Test

Make Kalkine Media
My Trusted Source

Highlights

Zip Co Ltd's share price has increased by over 10% following the latest quarterly update.

The company reported a 22.8% rise in total transaction value, reaching $2.8 billion, with revenue increasing by 18.8% to $239.9 million.

Analysts have varied opinions on the company's valuation, with some highlighting strong performance in the U.S. market.

Zip Co Ltd (ASX:ZIP) has seen a significant rise in its share price, gaining more than 10% this week following the release of its latest quarterly update. The company's performance has captured market attention, particularly as it has surged nearly 400% in 2024 and approximately 900% over the past year.

In the three months leading up to September 2024, Zip reported a total transaction value (TTV) increase of 22.8%, totaling $2.8 billion. Revenue also saw a notable rise, up 18.8% to $239.9 million, although the revenue margin decreased slightly to 8.5% from 8.8% in the prior quarter. Despite this decline, Zip's cash transaction margin improved to 3.9%, reflecting effective operational strategies. The company reported an impressive cash operating profit (EBTDA), which increased by 233.7% to $31.7 million, while net bad debts improved to approximately 1.6% of TTV.

Active customer numbers rose by 1.1% quarter-over-quarter to 6.08 million, and the number of merchants increased by 7% year-over-year to 80,100. These metrics indicate the company’s expanding market reach and operational growth.

Analysts have been evaluating Zip’s financial performance and future potential. Citi analyst Siraj Ahmed has expressed optimism regarding the company's ability to surpass market expectations in terms of TTV, revenue, and cash EBTDA, particularly due to strong momentum in the U.S. market. Ahmed has also highlighted rising net bad debts in the U.S. as the company seeks new customers, suggesting that the net transaction margin may have peaked.

UBS has maintained a positive outlook on Zip, calling it a strong performer, especially in the U.S., while noting challenges in the Australian and New Zealand (ANZ) markets. Overall, the analysis indicates a mixed but hopeful perspective on Zip’s future growth and operational profitability.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.