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Zip Co Ltd (ASX:Z1P) share price higher on Bunnings deal: Should you invest?

In morning trade the Zip Co Ltd (ASX: Z1P) share price has avoided the tech selloff and pushed higher following the release of a positive announcement.

At the time of writing the payment solutions company’s shares are up 2% to 95 cents.

What did Zip Co announce?

This morning the Afterpay Touch Group Ltd (ASX: APT) rival announced that it has added a major retailer to its buy now, pay later platform.

According to the release, Zip Co has agreed a partnership with Wesfarmers Ltd (ASX: WES) subsidiary Bunnings Group Limited to offer its interest-free payments to its customers.

Bunnings is Australia’s leading retailer of home improvement and outdoor living products and a major supplier to project builders, commercial tradespeople, and the housing industry.

It is the latest in a wide range of retailers that have recently been added to the platform. These include Amart Furniture, ARB Corporation Limited (ASX: ARB), Harris Scarfe, Sony, and Target.

Zip CEO and managing director, Larry Diamond, appeared to be delighted with the deal.

He said: “We are both thrilled and proud to partner with a truly historic Australian brand in Bunnings. We believe Zip will be a great fit for Bunnings, not only for life’s everyday necessities, but also for those larger aspirational home improvements, providing their customers with a better way to pay, over time, interest-free.”

He expects the Zip platform to be live throughout the Bunnings Australian store network by early December.

Should you invest?

I think this is a great partnership for Zip Co and could be a big boost to its revenue growth over the remainder of FY 2019.

Not that it necessarily needs a boost. In the first quarter of FY 2019 Zip Co reported quarterly revenue of $15 million, up 117% on the prior corresponding period.

If it can continue this form through into FY 2020 then I think Zip Co could prove to be a good investment. But at this stage, like Afterpay Touch, it is a reasonably high risk option for investors.

If you like shares like Afterpay Touch and Zip Co then I think you'll love these hot tech shares that have been tipped for big things.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended ARB Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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