It has been another positive day of trade for the Zip Co Ltd (ASX: Z1P) share price.
At one stage today the payments company's shares were up over 11% to $1.43, stretching their year to date return to a sizeable 30%.
Why is the Zip Co share price surging higher today?
Investors have been fighting to get hold of the shares of the Afterpay Touch Group Ltd (ASX: APT) rival after it delivered an impressive half year result.
During the first half of FY 2019 the company achieved record transaction volume of $495.2 million, which was more than double the prior corresponding period.
This led to Zip posting a 114% increase in revenue to $34.2 million and cash EBTDA of $2.4 million. The latter compares to a net outflow of $7.7 million in the prior corresponding period and was the first time that cash EBTDA has been positive.
Its total funding facilities stand at $631 million, of which $462 million had been drawn at the end of the period. However, management advised that it is well advanced on its medium-term funding roadmap which will replace the current warehouse facilities.
Pleasingly, the new structure is expected to deliver greater scale at a lower cost and should be in place by the fourth quarter of FY 2019.
Outlook.
According to the release, management believes Zip is on track to beat the expectations set at the beginning of FY 2019.
This is due to continued growth across all key drivers, a business model well positioned to implement any potential regulatory changes, strong transaction volumes, a healthy pipeline of potential partnerships, and a number of new retailers on its platform. These include Chemist Warehouse, Super Retail Group Ltd (ASX: SUL), and Wesfarmers Ltd (ASX: WES) subsidiaries Bunnings, Officeworks, and Target.
Should you invest?
As I mentioned here earlier this month, I've been very impressed with Zip's progress over the last 12 months and believe it could be worth considering a small investment in the fast-growing company along with rival Afterpay Touch. It is a reasonably high risk option, though, so it may be unsuitable for the average retail investor.
