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Highlights
- Massive Rally: Zip Co shares are on track to end 2024 with a staggering 370% gain, rebounding two years after its weakest performance.
- U.S. Market Expansion: The company’s success is fueled by its growing market share in the U.S. and robust performance updates.
- Capital Raise and Optimistic Outlook: Zip raised AU$217 million in July, while analysts and brokerages like Citi issued “buy” ratings, further boosting confidence.
Australia’s Zip Co (ASX:ZIP) is set to finish 2024 as one of the top-performing stocks on the ASX, with a remarkable 370% surge year-to-date. This represents a dramatic turnaround for the buy-now-pay-later (BNPL) provider, which had been reeling from its weakest year just two years ago.
Despite the strong recovery, Zip’s shares remain 70% below their 2021 peak, reflecting lingering caution following the decline of the BNPL frenzy.
Key Catalysts Behind Zip’s Rally
Several factors contributed to Zip’s exceptional performance in 2024:
- U.S. Market Gains: Zip’s U.S. operations showed consistent market share growth, a key driver of investor optimism.
- Upbeat Reports: In January, Zip shares soared nearly 16% following a positive quarterly report and upgraded half-year (HY) forecast.
- Capital Raise: The company successfully raised AU$217 million ($134.87 million) in July, with analysts responding positively to the move, viewing it as a step toward strengthening Zip’s financial position.
- Profit Boost: In October, Zip hit a two-and-a-half-year high after reporting improved HY profits, signaling sustained growth and operational efficiency.
Broker Confidence and Price Target Upgrades
The rally was further supported by Citi, which upgraded Zip to a “buy” rating in March and raised its price target, citing strong potential for market growth in the U.S. These endorsements bolstered investor confidence and provided momentum for the stock’s impressive climb.
Current Trading and Outlook
Zip Co shares are currently trading at AU$2.96, marking a significant rebound from its lows while still leaving room for growth compared to its 2021 highs.
As the company solidifies its position in the U.S. market and continues to benefit from favorable market conditions, analysts remain optimistic about its long-term potential.
