The Zip Co Ltd (ASX: ZIP) share price had a stellar run in November.
Zip shares soared 21.3% from 61 cents at market close on 31 October to 74 cents on 30 November. They are up a further 0.7% in today's trade. The S&P/ASX 200 (ASX: XJO) is 0.86% in the green today, while it gained 6.1% last month.
Let's take a look at why Zip had such a good month.
What happened to Zip in November?
Zip was not the only ASX buy now, pay later (BNPL) share to lift in November. Sezzle Inc (ASX: SZL) shares rose 14%, while Tyro Payments Ltd (ASX: TYR) shares surged 15%. However, the Block Inc CDI (ASX: SQ2) share price fell 1% in November.
The Zip share price soared 29% between market close on 10 November and 17 November alone before pulling back.
Better-than-expected inflation data in the United States in the middle of the month had a positive impact on BNPL shares, including Zip. News also emerged in mid-November that retail sales were better than expected in October. A positive business update from ASX BNPL share Sezzle on 16 November also appeared to boost investor sentiment.
On 21 November, news emerged that regulation for the BNPL sector could be on the cards. Commenting on the BNPL sector, Finance Minister Katy Gallagher said:
People are starting to see it as a credit card. It's responsible to have a look at how it is regulated and how people are using it, what some of the problems are and how to provide that protection to people
Early in November, Zip CEO Larry Diamond provided hope Zip can deliver positive earnings before interest, tax, depreciation and amortisation (EBITDA) by the first half of 2024. Diamond said:
We expect to see the US exiting FY23 cash EBTDA positive and to neutralise the cash burn from our rest of world footprint during the second half of FY23.
We are on track to deliver positive cash EBTDA as a group in the first half of financial year 2024.
Diamond highlighted a potential US$10 trillion addressable market in the United States. He also said in Australia, one-third of adults have a BNPL account and Zip's brand awareness is 60% among the 18 to 45 market. Commenting on the US, Diamond said:
In the US, the addressable market is estimated to be over US$10 trillion and BNPL penetration is still under 2%, including just 4% of e-commerce and 1% of in-store spend. This demonstrates the sheer size, and early stage of the BNPL opportunity that we are positioned to capture.
Diamond moved to the US in October to help Zip take advantage of what he sees as a "significant opportunity" for fintech in the USA. He said at the time, "US banks are asleep at the wheel".
Zip share price snapshot
The Zip share price has fallen 85% in the past year, while it has climbed 4% in the last week.
For perspective, the ASX 200 has returned 1.45% in the past year.
Zip has a market capitalisation of about $529 million based on its current share price.
