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Zip Co Down 7% Yesterday Amidst Half-Year Results

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

Zip Co (ASX: Z1P) sold off heavily yesterday, following the release of half-yearly results. Zip Co is a buy now, pay later platform where customers can own the products now and pay it back over time, interest-free. This attractive model has seen a 33% increase in transactions per active customer compared to early 2019.


Zip co-founders Larry Diamond and Peter Gray started the business in 2013. Jessic Hromas


Zip Co recorded a $69.3m of revenue growth for 1H20, up 103% compared to last year’s 1H19. Additionally, the company saw a recording-breaking increase in transaction volume of $964.7m ($495.2m in 1H19), whilst a 0.13% decrease in net bad debts to 1.68% (1.81%). The company’s focus on innovation has also helped them expand. The innovative security face ID technology and ID verification has helped streamline customer experience and fraud detection. The overall results show that their success stems from building their core business and continuously innovating their product.

Although Zip Co faced a 31% decrease in after-tax loss from heavy expansion, the company has acquired PartPay and Spotcap ANZ. The PartPay acquisition will help the company diversify into new geographies like the UK, US, and South Africa, giving Zip easy access to the company’s base of more than a hundred thousand customers. Spotcap provides a bridge for Zip Co to enter the SME sector which has $200 million in credit since its establishment in 2015.

Overall, while the market appears to have sold off rapidly on the back of coronavirus fears, the business model of buy now, pay later is still popular. Zip Co’s partnership with several attractive companies such as Amazon Australia. If Amazon Australia was to expand into the forefront of Amazon US, we could see the share price soar with hundreds of millions of Amazon members spend over $1000 a year.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

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ASR has no position in any of the stocks mentioned.


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