The meteoric rise of the Z1P Co Ltd (ASX: Z1P) share price has actually made the returns from more popular buy-now-pay later rival Afterpay Touch Group Ltd (ASX: APT) look rather pathetic.
Z1P shares are up 440% or so from $1.02 this time last year to $5.42 today, while Afterpay shares are up 'merely' 180% or so over the same period from $13.77 to $36.03.
So what's driving Z1P Co. shares higher?
Over fiscal 2019 Z1P posted an adjusted EBITDA (operating income) of $9.2 million on revenue of $84.2 million as customer numbers climbed 80% to 1.3 million. This kind of phenomenal growth from a reasonable scale is likely to lift any tech focused business in value over the short term.
Z1P also reported it has been "cashflow breakeven" for the past 6 quarters and that revenue is now annualising at more than $100 million.
Thanks to its rapid rise Z1P also joined the likes of Audinate Ltd (ASX: AD8), Bubs Australia Ltd (ASX: BUB) and Champion Iron Limited (ASX: CIA) in joining the S&P/ASX 300 Index of leading local companies.
When a junior company joins a larger index it tends to bring it more onto the radar of influential analysts and the buying pressure is also ramped up as index tracking funds buy into the companies.
Z1P raised more than $54.4 million over fiscal 2019 to mean it's now reasonably well funded to invest for growth in what is becoming a land grab for market share as younger consumers transition away from interest bearing credit card debt to buy-now-pay-later services.
According to its latest Appendix 3B regulatory filing Z1p Co. currently has around 352.8 million shares on issue to give it a market value around $1.91 billion.
This is arguably a pretty rich valuation given it posted an actual loss of $11.1 million over fiscal 2019, with different investors likely to take different views as to whether the growth on offer justifies today's price tag.
Z1P like Afterpay and others has the potential to horizontally expand away from largely online physical retail into the services sector as well. For example it's possible down the line that consumers will pay for the dentists, doctors, lawyers, or even a restaurant meal on a buy-now-pay-later basis.
As such it might be a mistake to think you've missed the boat on the buy-now-pay-later revolution.
