The Zip Co Ltd (ASX: Z1P) share price has had a rollercoaster year thus far.
Shares in the buy now, pay later (BNPL) provider started the year at around $5.40. By mid-February, they had rocketed to an all-time high of $14.53.
Since then, the company's shares have been harshly sold-off by investors and are currently trading in the $7 range.
Let's take a look at what's been moving the Zip share price and where it goes from here.
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Afterpay takeover fueling Zip share price
Zip has had a strong start to the month, surging by more than 14%.
The bullish price action is largely due to the recent news from BNPL market leader Afterpay Ltd (ASX: APT). Earlier this week, it was revealed that US financial payments company Square Inc (NYSE: SQ) had offered a $39 billion takeover offer for the BNPL behemoth.
As a result, the BNPL sector as a whole has been on fire since the news. The Zip share price has been a key beneficiary from renewed interest in the sector.
Potential takeover target?
Afterpay's purchase offer has also heightened investor expectations that Zip could be a potential takeover target.
Most recently, Swedish-backed BNPL provided Klarna increased its stake in Zip. Klarna, which is also part-owned by the Commonwealth Bank of Australia (ASX: CBA), reportedly took a 4% stake in Zip to consolidate its market share.
As the second-largest BNPL operator in Australia, shares in Zip have received extra attention following the company's expanding international presence.
Neither Zip nor Klarna have responded to the speculation.
Outlook for the Zip share price
Recently, a note from Citi highlighted a buy rating on Zip shares, with the broker initiating an $8.90 price target.
According to analysts, the acquisition of Afterpay could increase the takeover appeal in Zip.
In addition, the outlook for Zip is also dependant on how it has performed for the financial year.
In its most recent quarterly update, Zip flagged a 116% year on year increase in quarterly total transaction volume (TTV) to $1.8 billion.
In addition, the company reported a 104% increase in quarterly revenue to $129.9 million.
Currently, there is no published date on when Zip will report its results for the full year.
The Zip share price closed yesterday's trading session at $7.57.
