Zip Co Ltd (ASX: ZIP) shares have been a revelation over the past 12 months.
During this time, the buy now pay later (BNPL) provider's shares have absolutely smashed the market.
Why are Zip's shares beating the market?
Investors have been buying the company's shares after it defied the naysayers by proving that its business model can be successful even as interest rates rise.
Not only that, but the company also transitioned from making huge losses to being profitable.
As a reminder, in August, Zip released its full year results and revealed a 28.2% increase in revenue to $868 million and a sizeable 243.2% jump in cash EBTDA to $69 million.
The star of the show for the company was the Zip Americas business. It delivered record Cash EBTDA of $77.2 million (up 420%), record total transaction value (TTV) of $6.5 billion (up 39.5%) and record revenue of $450.6 million (up 45.6%). This was driven by optimisation across product and underwriting and continued growth from existing customers in higher-margin channels.
This was supported by the Zip Australia and New Zealand business. It achieved a record cash EBTDA result of $33 million (up 137.4%), revenue of $417.4 million (up 13.5%). This was despite Zip battling a significant increase in interest costs and a more challenged macro environment.
Commenting on the year, Zip Group's CEO and managing director, Cynthia Scott, said:
This has been an outstanding year for Zip, with the Company executing against all of its strategic priorities and reinforcing its position as a strong, simplified and profitable business. The team successfully delivered four quarters of profitability, achieving Cash EBTDA of $69.0 million for the year, an improvement of $117.0 million on FY23. This result was driven by Zip's particularly strong performance in the US with record cash EBTDA, TTV and revenue, and the ANZ business delivering a record cash EBTDA result of $33.0 million underpinned by continued margin expansion.
$5,000 invested in Zip
If you were brave enough to invest $5,000 into Zip's shares a year ago, you would have been able to do so at 38 cents per share.
This means that you would have picked up a total of 13,158 shares.
Today, those shares are worth considerably more. At the time of writing, the Zip share price is fetching $3.39. This is approximately nine times what they were going for just 12 months ago.
As a result, those 13,158 shares now have a staggering market value of $44,605.62.
That's not a typo! A $5,000 investment a year ago really is worth almost $45,000 today. Here's hoping there are more strong gains to come in 2025.
