The Zip Co Ltd (ASX: Z1P) share price is on fire today. Zip shares are currently up a healthy 2.42% at $4.23 each. But earlier this morning, it was a different story. Yes, Zip had a rather rough start to this Tuesday's trading day. This buy now, pay later (BNPL) company opened at $4.10 a share this morning before falling all the way down to $4.06 (down more than 1%) shortly after market open. But then, investors started buying, pushing the Zip share price up to the level we now see.
This is a rather strange move for Zip. Not because the broader market is doing anything too different. The S&P/ASX 200 Index (ASX: XJO) is currently up 0.57% today. But because of what is happening to the Afterpay Ltd (ASX: APT) share price this Tuesday.
As many investors would be aware, Afterpay and Zip are both peers and rivals in the BNPL space. Although Afterpay has long been the king of the hill when it comes to BNPL shares, Zip has been a strong silver medallist for years now.
So it goes without saying that these two ASX BNPL shares often move in tandem with each other. But not today.
In contrast to Zip's strong upwards move, Afterpay shares are getting hammered today. The BNPL pioneer is currently down a nasty 2.52% to $81.78 at the time of writing. What's more, Afterpay hit a low of $80.21 earlier this morning. That was a new 52-week low for this company, bringing it down to levels not seen since October 2020.
So why are Zip shares outperforming its rival Afterpay so dramatically today?
Zip share price zips past Afterpay
Well, one possible answer could be the performance of Afterpay's soon-to-be new owner. Back in August, Afterpay announced it was to be acquired by the US payments giant Block Inc (NYSE: SQ), formerly known as Square. This deal, which has now been green-lighted by both Block and Afterpay shareholders, will see Afterpay investors receive 0.375 shares of Block for every share of Afterpay owned. As such, providing the deal eventually goes ahead, investors are now likely valuing Afterpay more on what the Block share price does than on Afterpay's business fundamentals.
Well, last night, Block shares got massacred. The company closed a nasty 5.34% lower this morning (our time) at US$158.30 a share after touching a new 52-week low of its own (US$157.57). As such, the value of that 0.375 of a Block share that Afterpay owners are being promised also just slid 5.34%. So it's perhaps no surprise then that we see such a steep fall in the Afterpay share price today.
But Zip, having no pending takeover offer on the table to weigh its own shares down, is instead enjoying a solid day of gains on the ASX boards today. As are, mind you, many other ASX tech shares. These include Xero Limited (ASX: XRO), up 1.68%. As well as Appen Ltd (ASX: APX), up 1.87%.
At the current Zip share price, this ASX 200 BNPL share has a market capitalisation of $2.49 billion.
