Up 24% in a month: Why are investors so excited about Zip shares?

BNPL stock ZIp has had a stonking November. What's gone so right?

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The performance of the Zip Co Ltd (ASX: ZIP) share price of late has been rather extraordinary. One month ago, the buy now, pay later (BNPL) share was asking just 30 cents a share. On the last day of October, Zip stock even got as low as 28 cents a share. A month before that, the company was exploring new 52-week lows of 26 cents a share.

But fast forward to today, and things are looking far rosier. At present, the Zip share price has put on a pleasing 4.8% and is asking 37 cents a pop.

That leaves this BNPL stock up a happy 24% over the past month.

Well, today's 8%-plus rise is an easy one to explain. As my Fool colleague Bernd covered earlier today, Zip, along with most other ASX BNPL shares, are soaring thanks to a decision to push back new laws aiming to raise the regulations that BNPL companies face.

The new laws, which would have seen BNPL services regulated in a more similar manner to that of credit card providers, were due to be implemented this year. But it now seems that they will only be established sometime during 2024.

However, as we've already established, Zip's epic run started at the beginning of the month.

What's behind Zip shares' fantastic November?

There are two primary candidates for a possible catalyst for Zip's impressive November thus far. Firstly, back in late October, Zip dropped its latest quarterly earnings update. Investors seemed mightily impressed at the time, with Zip reporting a 31.9% rise in quarterly revenues to $204.4 million, as well as an 11% lift in transaction volumes to $2.3 billion.

The Zip Share price initially wobbled in the few days after this update was released. But perhaps investors have decided it was a winner in hindsight.

Secondly, Zip' far-larger BNPL rival Block Inc (ASX: SQ2), which of course now owns Afterpay, also revealed some eye-popping numbers earlier this month. For one, Block's quarterly revenues spiked 24% to US$5.62 billion, allowing the company to boost its gross profits by 21% to US$1.9 billion.

But Block also announced that its BNPL gross merchandise value (GMV) had jumped 24% for the quarter to US$6.7 billion.

This may have also boosted investor sentiment in Zip, given strong growth across any BNPL platform is arguably good news for any stock in this still-fast-growing sector.

So it's probably a combination of these factors that has led to such a lucrative month for Zip shareholders. However, keep in mind that the Zip share price still remains down by 33.6% over 2023 to date.

Let's see what December brings for this ASX BNPL share.

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. has positions in and has recommended Block and Zip Co. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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