Zip Co Ltd (ASX: ZIP) shares have reared their head as something of a market darling once again in 2024.
The ASX's largest buy now, pay later (BNPL) share first emerged as a hot stock during the 2019 BNPL craze. It has had several dramatic peaks and troughs since, last ascending to an all-time high in the COVID haze of early 2021. Back then, Zip climbed as high as $14.50 a share.
But it has been downhill ever since, at least until the start of this year. Zip last touched a new 52-week low around this time last year, when it dipped as low as 26 cents a share.
If one had bought Zip shares back then, they'd be laughing all the way to the bank today. This Tuesday, Zip shares are trading at $2.76 each. That's up a healthy 2.41% for the day thus far. At this pricing, Zip stock is up a whopping 986% from that 26-cent low we saw in 2023.
Zip shares are also up 21.8% over the past month alone. Not to mention up a huge 346% in 2024 to date. Check all of this out for yourself below:
Even after this stunning rise in 2024, Zip's market capitalisation is currently at approximately $3.61 billion. Now, that's nothing to turn one's nose up against, of course. But it doesn't exactly put Zip shares amongst the heaviest-hitting large-cap stocks of the ASX.
To illustrate, Woolworths Group Ltd (ASX: WOW), Telstra Group Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA) currently boast market caps of $40.2 billion, $45.35 billion and $231.5 billion, respectively.
But one ASX expert thinks Zip shares might just have what it takes to make it to the big leagues.
ASX expert calls Zip shares a future large-cap
As reported in the Australian Financial Review (AFR) this week, fund manager Regal Partners has done very well out of its investment in Zip, building a "sizeable position" over the past 12 months, starting from around the 30-cent mark. Regal chief investment officer Phil King reportedly told clients in a recent note that Zip "has the potential to be a smaller large-cap" stock on the ASX.
Regal noted that Zip shares have a "long runway of growth" in the United States, pointing clients to how BNPL penetration is sitting at 2% in the US market despite Zip adding 2,000 new merchants in FY2024 alone. That 2% rate compares to 14% in Australia, which has been driven by younger consumers shunning credit cards in favour of BNPL in particular.
Regal argues that "this structural change in borrower and consumer behaviour should continue to grow the total addressable market" for Zip. According to Regal, this will be supplemented by the network effects of increasing adoption of BNPL as a payment method.
No doubt Zip shareholders will be delighted to hear this bullish outlook from an ASX expert. But only time will tell if Zip is destined to be an ASX large-cap share.
