Is the Zip (ASX:Z1P) share price a buy or a sell?

Is the Zip share price worth looking at right now?

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A man tuches his finger to a cyber payment screen indicating a wider range of shopping options

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The Zip Co Ltd (ASX: Z1P) share price has been volatile in 2021 so far and now there’s a question of whether it’s good value or not.

The buy now, pay later business has been down to $6.70 this year, but it has been as high as almost $14. So, it has seen a hefty decline since February 2021.

Last week the company gave an update for its FY21 fourth quarter.

The numbers

It reported record group quarterly revenue of $129.9 million, up 104% year on year. Zip pointed to record monthly revenue in June, annualising at $537.2 million.

Zip has seen record quarterly transaction volume of $1.8 billion, up 116% year on year. There were also record transaction numbers for the quarter of 14.2 million (up 230% year on year).

Customer numbers increased by 87% year on year to 7.3 million.

Zip is continuing to executive on its global strategy, agreeing to require the remaining shares in both Twisto Payments (in Europe) and Spotii (in the Middle East). The quarter also saw Zip launch organically into Canada and Mexico.

The business revealed very strong growth in the US. American revenue improved by 280% to $64.3 million, transaction values increased 247% to $857.1 million and US transaction numbers went up 250% to 4.9 million. Revenue as a percentage of total transaction value (TTV) was maintained at 7%, continuing to deliver “market-leading” unit economics.

In its first full quarter of trading, the Zip UK segment saw revenue of $1 million, with a transaction volume of $13.9 million.

‘Zip Business’, which is focusing on small businesses, saw revenue growth of 39% quarter on quarter to $3.2 million. That was on volume of $38.7 million, an increase of 79% quarter on quarter (or 430% year on year).

Zip managing director and CEO Larry Diamond said:

We are now a truly global player with a presence in 12 months, and this is a real point of difference as we target global retailers and fulfil our mission to become the first payment choice every day.

We believe Zip can become the most fair and responsible brand in the world, on the side of merchants and consumers.

Is the Zip share price a buy or not?

There are very differing opinions about the buy now, pay later business.

Citi is very positive on the business, with a buy rating and a price target of $10.25. That suggests Zip shares could rise around 50% over the next 12 months. The ability to shop anywhere Visa is accepted with Quadpay in the US offers a good positive for the broker.

But there’s also the broker Macquarie Group Ltd (ASX: MQG) with sell rating and a price target of $6.15. That suggests a decline of almost 10% over the next 12 months. The broker isn’t sure about Zip’s move to change the name of Quadpay to Zip considering it’s the name Quadpay that consumers know. The broker is also concerned about rising competition in the US.

Should you invest $1,000 in Zip right now?

Before you consider Zip, you'll want to hear this.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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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