Why the Zip (ASX:Z1P) share price is up 11% in 2 days

Why have Zip shares been on fire this week?

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The S&P/ASX 200 Index (ASX: XJO) is having a day to remember on the ASX boards this Thursday. At the time of writing, the ASX 200 is up a healthy 0.98 % to 7,369 points. But one ASX 200 share is doing one better. That would be the Zip Co Ltd (ASX: Z1P) share price.

Zip shares are on fire today, up a sizeable 4% to $6.77 at the present time. Ever since finding a new 2021 low of around $6.10 a share on Tuesday, the Zip share price is now up more than 11% since then. That’s a pretty decent return for just two days.

So what’s going on with Zip shares this week?

Zip share price bags some BNPL gains

Well, we did get an announcement out of the company yesterday, which seems to have been well-received by investors. As we covered at the time, Zip announced that it has made a US$50 million “strategic investment” in the Indian buy now, pay later (BNPL) company ZestMoney. According to Zip, ZestMoney is one of the “largest and fastest growing” BNPL players in India, with 11 million registered users and 10,000 merchants using the platform.

This US$50 million investment will give Zip a minority shareholding in ZestPay, but the company has also negotiated terms that would allow a greater ownership in the future, as well as a board seat and a say over future decisions.

Since the Zip share price rose by 4.5% yesterday, and is up another 4.15% so far today, we can probably say that investors approve of this ZestPay announcement.

Another factor that may be helping Zip shares today is sentiment over tech shares in general. The tech sector is leading the ASX 200’s gains today, with the S&P/ASX All Technology Index (ASX: XTX) up a very robust 2.96% so far this Wednesday.

Other ASX tech shares like Afterpay Ltd (ASX: APT)Xero Limited (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) are all up by more than 2% so far today, with Afterpay up more than 4%. Big rises in the US tech space overnight are probably responsible.

Zip shares are now up a healthy 21.5% year to date in 2021 so far. However, it’s ‘only’ up by roughly 8.8% over the past 12 months.

At the current Zip share price, the company has a market capitalisation of $3.82 billion.

 

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Motley Fool contributor Sebastian Bowen 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 AFTERPAY T FPO, WiseTech Global, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, WiseTech Global, and Xero. 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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