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Why is the Zip (Z1P) share price up 140%? It’s a BNPL mystery


Zip shares have jumped more than 11% Tuesday despite no notable news.

  • The unusual price activity prompted the ASX to request a "please explain"
  • Zip says it's not sure what's causing the latest price rally
  • The BNPL has delivered positive news in recent months
  • Digital payment stocks are positive across the board

Zip management say they're scratching their heads after the stock's price inexplicably surged on Tuesday.

Shares in buy now pay later (BNPL) provider Zip Co (Z1P) have been shooting the lights in recent weeks, rising more than 140% in the last month and almost 40% in the last five days alone.

While shareholders must be thrilled, the turn of events Tuesday has also left many perplexed, with no obvious reason behind this latest rally.

The unusual activity prompted an inquiry by the Australian Securities Exchange (ASX), asking Zip whether any news had been released in breach of ASX rules.

But Zip management say they're not aware of any information that could have led to the recent activity. Instead, they suggest it could be related to the recent interest in the buy now pay later industry.

What might be causing it?

It's difficult to say what's driving Tuesday's rally; however, there has been some good news from Zip in recent weeks.

On 21 January, the company announced a revenue jump of 88% to $102 million for the second quarter. The profit report also showed customer numbers jumped 97% year on year to 5.7 million and merchants allowing Zip payments rose 73% to 38,500.

Shares rose more than 16% in the day following the news and have continued climbing at a relatively steady pace ever since.

On 1 February, Zip announced the appointment of high profile corporate leader Diane Smith-Gander as chairman to replace Philip Crutchfield. Following the news, shares rose more than 4%.

And further back at the start of January, Zip also enjoyed an oversubscribed share purchase plan, raising around $176 million to go towards its UK expansion.

As Zip suggested, part of the momentum could be explained by the current enthusiasm for BNPL stocks. Malaysia-focused BNPL platform IOUpay has seen its price jump more than 200% in the last month after it synched a deal with ecommerce platform, EasyStore.

Afterpay (APT) shares are up around 28% since the start of the year as well.

Meanwhile, social forums and stock sentiment are also becoming significant drivers of stock prices as we saw during GameStop's volatility. While it's hard to draw a direct line here, Zip enjoys a strong following on investment discussion forums such as Facebook's ASX Stock Tips or HotCopper, where the BNPL provider is regularly featured as one of the most discussed stocks on the site.

On Tuesday, Zip was the second-most discussed stock on HotCopper, which has more than 250,000 members and hundreds of related posts.

How to buy Zip shares

To buy shares in an Australian company, you'll need to sign up to a broker that offers ASX-listed shares.

To sign up to an online broker, you'll typically need to provide proof of ID, your address and your tax file number. It can take up to a week before you're properly signed up.

Once you've transferred funds into your new account, you can search for Zip using the company name or its ticker code (Z1P). Then set a buy order by using a market order or a limit order if you have a specific price in mind.

To find out more about purchasing shares in Zip, you can check out our guide on how to buy Zip shares.

How to invest in shares in Australia

Looking for a low-cost online broker to buy stocks? Compare share trading platforms to start investing in stocks and ETFs.

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