The Motley Fool

Here’s why the Zip Co Ltd share price is soaring today

The Z1P Co Ltd (ASX: Z1P) share price is 15 cents or 6% higher this morning after the buy-now-pay-later star reported record quarterly revenue of $23 million for the quarter ending March 31 2019, which is up 20% on the prior quarter. It also reported it has a total of 14,363 retailers signed up which is up 13% on the prior quarter and 60% on the prior corresponding quarter.

Both the group’s cash operating costs as a percentage of sales, and cash cost of sales as a percentage of receivables, also reduced by 50 basis points and 10 basis points respectively, in a sign that its underlying operating metrics are tracking in the right direction if somewhat slowly.

A slight disappointment is that total transaction volume fell 8% over the quarter, compared to the prior quarter with total transactions also flat, although it must be remembered that the Christmas quarter is when a lot of consumers do most of their shopping.

Z1p also raised $56 million over the quarter as it needs to invest as it’s obviously in a land grab race for market share with competitor, first mover, and market leader AfterPay Touch Group Ltd (ASX: APT).

However, it’s worth noting that Zip’s market cap still sits well below $1 billion, compared to AfterPay’s $5.6 billion valuation largely thanks to investors anticipating AfterPay shooting the lights out in the U.S. market.

While another buy-now-pay-later start-up in Splitit Ltd (ASX: SPT) today reported that it had signed up just 57 retailers over the 3 months to March 31 2019, but that’s not stopped ‘traders’ sending the shares up 24% today.

On my maths at its current retailer sign up rate it would take Splitit around 111 years just to get where AfterPay is today. I’m all for investing for the long-term, but Splitit shareholders might to find the Holy Grail Cup of eternal life unless the company ramps up its performance in the short term.

While bargain hunters might want to do some more research into Z1P Co given it’s still growing at healthy double-digit rates.

Here it is... Our #1 Dividend Share Pick for 2019

For a brief time, The Motley Fool Australia is giving away some of its most valuable research of the entire year. Simply by clicking the link below, you’re invited to discover our #1 absolute favourite dividend share to potentially profit inside the next 12 months (and beyond).

HINT: This is an ‘under the radar’ company boasting in a mouth-watering combo of GROWTH potential and FULLY FRANKED DIVIDENDS. Yet chances are you don’t know the name or the code. And perhaps you’d like to peek at our full investment analysis too, including all the reasons we expect this company to soar in 2019?

To get your access before it’s too late, simply click below now. Your copy is free, but this valuable report will NOT be available forever...


Motley Fool contributor Tom Richardson owns shares of AFTERPAY T FPO.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of AFTERPAY T FPO. 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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.