Zip Co Ltd (ASX: ZIP) shares have continued their surge this week after the company posted its quarterly cash flow numbers on Tuesday.
Shares in the payments provider are up 5% on the day to $2.01 apiece, extending their rally to 216% so far this year.
The S&P/ASX 200 index (ASX: XJO) is up over 7% during the same time.
Let's see what's got the market buzzing on Zip shares following the quarterly update.
Zip shares rally on cash flow growth
Investors have bid up Zip shares this week after its cash flow update for the quarter ending 30 June 2024.
For starters, the company reported $224 million in receipts from customers for the quarter, in line with the previous three months.
It has collected $872 million in cash from customer receipts so far in 2024.
But after all expenditures, operating cash flows stood at $65 million, up more than 225% from the quarter ending December last year.
Zip's cash flows are underscored by the receipts collected from its customers. However, interest payments were also down $10 million sequentially. This could be positive for Zip shares moving forward.
The cash flow report also showed that Zip raised $583 million in borrowings and repaid $621 million of debt during the period.
Despite the repayments, Zip ended the quarter with a solid cash balance of $353 million, an increase from the previous quarter's $327 million.
Is the trend over?
With the company's latest cash flow numbers, there's no saying what prices investors will pay for the stock moving forward. And with Zip shares now at 52-week highs once more, many investors might wonder if it's too late to participate.
Opinions are mixed among experts. UBS and Ord Minnett had buy ratings on Zip in July. But their respective price targets of $1.55 have been met with glee.
Consensus leans positive too. According to CommSec, Zip shares are rated a buy from consensus estimates.
Investors have also responded positively to Zip's quarterly performance. The company's pivot from aggressive growth to a focus on profitability has resonated well, and perhaps they see Zip executing its strategy well.
Shares are now up more than 10% in the past week, with around 21.2 million shares traded on average in the last month.
There's no saying how long any trend will last, but the momentum is in situ on Thursday.
Foolish takeaway
Zip shares continue to rally following the company's quarterly cash flow numbers. The stock is up more than 336% in the past 12 months.
While the company's prospects look promising, you should always conduct your own thorough due diligence, considering both market conditions and personal investment risks.
