Why the Zip Co (Z1P) share price is running higher today

Posted: 8 July 2021 1:25 pm

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.

Expanding business

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.

Considering investing in Zip Co shares?

If you are keen to buy Zip shares, you should consider investing through an online share trading platform.

Keep in mind that not all platforms offer the same list of stocks. Some trading platforms offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.

Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms available for Australian investors.

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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