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Why did the Zip (ASX:Z1P) share price rocket 43% in February?

Man looking excitedly at ASX share price gains on computer screen against backdrop of streamers
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The Zip Co Ltd (ASX: Z1P) share price was in fantastic form last month.

In fact, with a gain of 43%, the buy now pay later (BNPL) provider’s shares were the best performers on the S&P/ASX 200 Index (ASX: XJO) over the period.

Why did the Zip share price rocket 43% in February?

There were a number of catalysts for the strong performance by the Zip share price in February.

The first was the IPO of rival BNPL provider Affirm in the United States in January. That IPO was so successful it appears to have driven a re-rating of a number of BNPL shares like Zip and Sezzle Inc (ASX: SZL).

In addition to this, speculation that the company could be looking at a secondary listing in the United States got investors excited. Not only would this allow US fund managers easier access to its shares, it would make it easier for Zip to access capital markets when necessary.

What else is driving its shares higher?

But perhaps the biggest driver of the Zip share price outperformance in February was its second quarter and half year update.

Investors were fighting to get hold of the company’s shares following the release of its second quarter update at the end of January.

That update revealed that its US QuadPay business has been growing at an explosive rate even though competition is increasing from the likes of Shopify and PayPal.

For the three months ended 31 December, QuadPay recorded a 217% increase in second quarter transaction volume to $673.1 million. This was underpinned by a 180% lift in customer numbers to 3.2 million and a 655% jump in merchants to 8,400.

Can the Zip share price go higher?

The good news is that one broker is tipping the Zip share price to continue its remarkable run in March.

According to a note out of Morgans from last week, its analysts have retained their add rating and lifted their price target on its shares to $12.10.

Based on the current Zip share price, this price target implies potential upside of 10.5% over the next 12 months.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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