Up 277% since April, why Zip shares could keep racing higher in 2025

A leading fund manager expects more outsized near-term returns from Zip shares.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Zip Co Ltd (ASX: ZIP) shares finished the week on a high note.

Shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock closed up 4.66% on Friday, trading for $4.49 apiece.

That puts the stock up 112% since this time last year.

Investors who channelled their inner Warren Buffett to be greedy when others are fearful, and who bought the ASX BNPL stock at its one-year closing lows on 7 April, will be doing even better.

Zip shares closed at $1.19 on 7 April, with the stock now up a blistering 277.3% since then. Or enough to turn a $10,000 investment into $37,731. In just five months.

Now you might think that after such a tremendous run higher, that Zip's bull run may be running out of puff.

But Stephen Wood, portfolio manager of Eiger Capital's Australian Small Companies Fund, begs to differ (courtesy of The Australian Financial Review).

Three people jumping cheerfully in clear sunny weather.

Image source: Getty Images

Why this fundie is bullish on the surging ASX 200 BNPL stock

Asked which stock in his fund has the most near-term upside potential, Wood pointed to Zip shares.

"Although it has run very hard, we believe Zip Co has the potential to be materially bigger with its rapidly growing franchise in the United States," he said. "Zip's form of credit is different and differentiated in the US market."

According to Wood:

It's attracting customers who find its features better than the banks – those who frankly don't want to deal with a bank and whose persona don't fit traditional bank criteria. Thanks to the gig economy, this customer segment is only growing and buy now, pay later is an attractive form of consumer finance for many people.

As for that growth outlook, Wood said, "Zip is guiding to greater than 35% volume growth this financial year with increased margins."

What's driving Zip shares higher?

Zip reported its full-year FY 2025 results on 22 August.

In FY 2025, Zip's total transaction volume (TTV) increased by 30.3% year on year.

Atop the 35% FY 2026 TTV guidance growth that Wood mentioned above, the company also upgraded the FY 2026 outlook for its operating margin to between 16.0% and 19.0%. That's up from 15.8% in FY 2025.

Commenting on the outlook, Zip CEO Cynthia Scott said:

We are well placed to deliver on our refreshed FY26 guidance and next horizon of growth, as we execute our strategic priorities of growth and engagement, product innovation, and platforms for scale, and fulfil our purpose of unlocking financial potential, together.

Zip shares closed up a whopping 20.2% on the day the company reported.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on BNPL shares

women with her fingers crossed and eyes shut
BNPL shares

Prediction: Zip shares could explode over 230% to $5.27

Zip has faced multiple headwinds and slumping investor sentiment over the past six months.

Read more »

A man is shocked about the explosion happening out of his brain.
Bank Shares

Forget NAB shares, this ASX fintech stock could double in value

Most brokers see downside for NAB, but upside of up to 185% for this ASX share.

Read more »

A young woman looks happily at her phone in one hand with a selection of retail shopping bags in her other hand.
Share Market News

3 reasons to buy this oversold ASX growth stock today

Brokers are upbeat and see upside up to 196%!

Read more »

Photo of two women shopping.
BNPL shares

Are Block shares back in play?

Brokers are upbeat and see a 70% to 170% upside.

Read more »

A happy shopper with a wide mouthed smile holds multiple shopping bags up around her shoulders.
BNPL shares

Why Zip shares are bouncing back 5% today

Some brokers see current share price as a buying opportunity with 100%+ upside.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
BNPL shares

This expert thinks the Zip share price is a buy and could rise 140%!

This expert says Zip is an opportunity to buy now.

Read more »

A man in a business suit scratches his head looking at a graph that started high then dips, then starts to go up again like a rollercoaster.
BNPL shares

Down 45% in 2026, could you double your money buying the dip in Zip shares now?

A leading investment analyst says that the argument for buying the latest dip in Zip shares “must be asked”.

Read more »

Ecstatic woman on her phone giving a fist pump after reading some good news.
BNPL shares

Why are Zip shares rebounding 5% today?

This beaten down stock plans to buy its shares on-market.

Read more »