Why the Zip Co (Z1P) share price is running higher today
Shares in BNPL provider Zip Co have risen more than 30% in the last 12 months.
Buy now pay later (BNPL) operator Zip Co Ltd (ASX: Z1P) is among the top traded shares on the ASX on Thursday. Zip shares jumped more than 10% in early trading, before easing slightly. They were still up 8.2% at $8.35 at the time of writing.
Why is the Zip stock price lifting?
Shares in the BNPL provider have lifted following media reports that a rival BNPL provider has acquired a strategic stake in Zip.
The Australian Financial Review reported that Sweden-based Klarna is believed to be the buyer of a 4% stake in Zip worth about $160 million, in a move to strengthen its position in the BNPL market.
Klarna last month raised US$639 million in a new funding round led by Japanese giant SoftBank, giving it the biggest valuation among the major BNPL players globally. Local heavyweight Commonwealth Bank (ASX: CBA) owns a minority stake in Zip.
While neither of the 2 parties has commented on the issue, the speculation has been enough to lift sentiment in Zip, which is among the biggest players in the BNPL sector alongside Afterpay and Klarna.
The news comes at a time the BNPL sector has been facing investor concerns about the potential impact of rising interest rates and rising competition on the business model.
Zip has been in the spotlight in recent months after announcing it was expanding international presence by raising stakes in UAE-based Spotii Holdings and Europe-focused Twisto Payments.
That deal put Zip in strong competition with Klarna in Europe and the Middle East, among the fastest-growing global ecommerce regions.
The Australian fintech provider had already boosted its footprint last year following the acquisition of New York-based QuadPay for $403 million, giving it a strong foothold in the world’s biggest retail market.
That has helped Zip deliver strong sales and transaction growth in the last year.
That is reflected in the performance of Zip shares, which have risen 31% over the past 12 months.
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