The Zip Co Ltd (ASX: ZIP) share price has surged more than 300% this year to date after staging a 16% rally this past month.
Shares in the buy now, pay later (BNPL) player are currently fetching $2.56 per share, down more than 7% in the past week.
But what's driving the buying of Zip shares this year? Let's take a closer look.
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What's driving the Zip share price?
The Zip share price has enjoyed a mammoth wave of buying momentum over the past year. This is largely due to its financial performance and various company updates.
Investors were first buoyed by the company's H1 FY24 financials, which showed a serious turnaround in the business from prior years.
Before this, it had made the call to avoid growing the business without producing shareholder value alongside it.
The financial momentum continued in the back end of FY24. For the full year, revenues grew 28%, producing total transaction volumes (TTV) of $10.1 billion, up 14%.
Consequently, gross profit saw a 53% increase from FY23.
These factors have seen investors jump in on the BNPL player, seeing the Zip share price spike.
Opportunities for growth exist
Fundies are all over Zip, with several institutional investors recently taking their book and backing the Zip share price.
Regal Partners believes Zip could grow into a large-cap stock – which looks set to happen after recent developments.
The fund manager noted Zip's "long runway of growth" in the US and its expanding network of merchants as growth factors, according to The Australian Financial Review.
Regal also pointed out that Zip added 2,000 new merchants in the US during FY24. It bought Zip at 30 cents per share and still reportedly owns a large position. You do the math on that one.
Meanwhile, the team at Blackwattle Small Cap Quality Fund are also bullish on the Zip share price.
In its August fund letter, the firm pointed out Zip due to its US growth, new partnerships such as Google Pay and Stripe, and a healthy balance sheet.
According to my colleague Bernd, Blackwattle added that Zip still presents a "significant opportunity for growth" in the US market. This could be a positive for the Zip share price.
Foolish takeaway
The Zip share price has been on a tear, and with strong US growth, expanding partnerships, and the possibility of a takeover, many analysts believe the stock could continue to rise.
The stock is up nearly 900% in the past 12 months. Yes, you read that correctly.
