Zip share price today1/7/2024 ![]() The pressure on the remaining players will be immense as interest rates rise, and investors expect profits, not hollow promises. BNPL is a feature, not a stand alone product. ![]() “BNPL is not the next big thing in payments, nor is anyone cutting up their credit cards and moving to Zip or the others. Kelly continued his warning for the industry: These businesses are tiny and they are not the chest beating, bank killing giants that they pretend to be.” This gives the BNPL sector a market share of card payments of only 1.5% after 8 years of operation. “The BNPL as an industry in Australia had total sales of $11.4 billion last year compared with credit and debit cards which came to a total of $750 billion. Kelly warned investors that BNPL companies are extremely good at marketing and hyping up their products, but ultimately the numbers are not in their favour: Making things worse, the companies have been running heavy losses and stacking up massive debts for years. This is because every single BNPL company in Australia, including the market leaders: AfterPay (now owned by Block) and Zip Pay are yet to turn a profit or pay a dividend. How did Zip and the entire sector collapse in such spectacular fashion and can investors expect prices to recover any time soon? Zip Pay (ASX:Z1P) All-Time Price ChartĪccording to the managing director of Payment Services and payments industry expert Brad Kelly, Zip Pay and the remaining Aussie BNPL providers are set to experience an “implosion” throughout the remainder of this year. So, what actually happened to Zip Pay and the Australian BNPL sector. This is particularly true for anyone that bought shares in former Aussie market-darling Zip Pay (ASX: Z1P) which is currently trading for $1.72, down over 80% from its all-time high of $12.50 in February last year. I prefer Zip shares to Afterpay Ltd ( ASX: APT), but there are ASX growth shares out there that are already generating a net profit each year.If you’ve invested any amount of money in Australia’s once-booming buy now, pay later (BNPL) sector over the last year, you’re probably still wincing every time you open up your portfolio. However, until Zip is generating a net profit and a positive operating cashflow, it may need to keep tapping the market for more funds. With this extra cash raised, Zip will be able to fund more growth for merchants, which may push the Zip share price higher. This level of growth will help the Zip share price over time. ![]() Zip US saw transaction growth of 234% to $762 million, 188% growth of revenue to $54.4 million and customers increasing 153% to 3.8 million. It delivered growth in what’s normally a quieter period. Growth is slowing in the domestic markets, but in the US its Quadpay business continues to perform very strongly. The business did just report its FY21 third quarter numbers which saw elevated levels of growth of transaction volume, revenue, customers and merchants. I think it makes a lot of sense to raise more money with the Zip share price last trading at around $9.60, which is 280% higher than a year ago. The AFR’s Street Talk suggested that the reason for the offering was that the buy now, pay later business wanted to use the current strength of its share price to improve the strength of its balance sheet. This is sort of like a bond which can be converted into shares in the future by a certain date at a certain price. Zip is reportedly going to launch a $300 million convertible note offering. Whilst there wasn’t much detail in the ASX release, the Australian Financial Review was able to share some details about what the BNPL company is expecting. Zip shares will come back to the market on Friday at the latest. The buy now, pay later business said that it’s going to undertake a capital raising and formally announce it later this week. The Zip Co Ltd ( ASX: Z1P) share price has been halted after announcing it’s going to undertake a capital raising.
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