If you could only pop back one year, you could buy Zip Co Ltd (ASX: ZIP) shares for 28 cents apiece.
That was a stark discount to the $12.35 those same shares commanded back in mid-February 2021. A 97.7% discount, to be precise.
As such, you'd have been forgiven for waiting on the sidelines to see whether Zip shares were now bargain-basement priced or the dreaded falling knife.
And indeed, many investors, myself included, did end up waiting on the sidelines.
Much to our dismay.
Today, Zip shares are trading for $2.90 apiece.
While that's down 1.2% in intraday trading, it sees the shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock up 903.6% over 12 months.
Or enough to turn a $5,000 investment into $51,786. In just one year.
Of course, we're not asking if you'd be crazy to buy Zip shares a year ago. Knowing what we know today, you'd be crazy not to!
But should you think about buying at $2.90 a share?
What's been driving Zip shares higher?
Here's a quick recap of the year just past to help you get a better grasp of what may be ahead for Zip shares.
In FY 2024, the ASX 200 BNPL stock managed to boost its revenue by 28.3% from the prior year to $868 million. This was spurred by $10.1 billion in total transaction volume (TTV), up 14% from FY 2023.
Pleasingly, the company's cash gross profit of $373 million was up 52.8%.
The balance sheet is in good shape, with a $267 million capital raise, which the company used to pay off its corporate debts.
Is it too late to buy the ASX 200 BNPL stock?
Lacking a time machine to buy Zip shares for 28 cents each, is it too late to buy them now at $2.90 a pop?
Well, according to consensus recommendations on CommSec, probably not.
Seven analysts rate Zip as a 'strong buy', one as a 'moderate buy' and one as a 'moderate sell'.
Now, this was last amended on 28 August, when Zip stock was trading for $2.38. But that's still a bullish assessment by some leading investment experts.
Even at today's $2.90 a share, I believe this soaring ASX 200 BNPL share has more growth potential ahead.
The company's shift to a lower-cost, more sustainable and profitable business model is clearly paying off. And I suspect it will continue to do so in the year ahead. Though I wouldn't hold my breath for another 903% 12-month gain!
Commenting on the company's outlook following the FY 2024 results, Zip CEO Cynthia Scott said:
We maintain a clear strategy with identified growth opportunities in both markets to drive continued profitable growth in FY 2025 and beyond and deliver long-term value for our customers, merchants and stakeholders.
Another potential tailwind for Zip shares is lower interest rates in the US and Australia, its two primary markets. BNPL stocks have proven to be very sensitive to interest rates.
And with the US Fed now having delivered its first rate cut, with more on the horizon, and the RBA poised to begin easing over the coming months, Zip could well enjoy another uplift in TTV and revenue.
