The Zip Co Ltd (ASX: Z1P) share price has seemingly gone nowhere since announcing its Quadpay acquisition back in early June. The glory days saw the Zip share price jump 40% on the day of the announcement and 22% the next, to reach a record all-time high of $6.40 per share. Fast forward six months and the Zip share price is sitting around the exact same levels. What happened to the Zip share price?
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Solid update but did not inspire share price rally
Zip delivered a solid October FY21 year-to-date trading update on Monday. Its revenue for the first four months of the year was up 91% to $96.7 million. It hit record transaction volumes in October of $401.1 million, up 104% year on year.
The company also became the first buy now, pay later (BNPL) provider to launch a Chrome Extension. This is a mechanism that allows customers to pay later on any website utilising virtual card technology alongside a Google plug-in.
The Zip share price opened 5% higher on Monday but closed flat.
Afterpay a clear market leader
Buy now, pay later shares across the board, including Sezzle Inc (ASX: SZL), Splitit Inc (ASX: SPT), Openpay Group Ltd (ASX: OPY), Flexigroup Limited (ASX: FXL), Laybuy Group Holdings Ltd (ASX: LBY) and Zip, have similar price charts where FY21 returns are flat to negative.
The Afterpay Ltd (ASX: APT) share price, on the other hand, has more than doubled since June. But it also trades at the most expensive revenue multiple of all the BNPLs. At today's Afterpay share price, the company trades at approximately 53 times FY20 revenue. Zip trades at 20 times while Laybuy, the cheapest of the lot, trades at 12 times FY20 revenue.
A lack of international expansion
While Zip does have exposure to major international geographies, being the United States and the United Kingdom, the company has not announced any additional expansions.
Afterpay is the only BNPL player to have invested and mobilised in other countries beyond the US and the UK. Its acquisition of Pagantis is progressing well and is on track for completion by the end of the 2020 calendar year, pending regulatory approval by the Bank of Spain. Pagantis provides Afterpay with a license to operate in Spain, France, Italy and Portugal as well as pending license passport applications to Germany and Poland. The combined population of all these countries totals approximately 300 million, compared to the 328 million population of the US.
Afterpay has also established a base in Singapore to drive the development of the South East Asia market. The initial development of its EmpatKali acquisition opportunity in Indonesia is also underway.
