Zip Co Ltd (ASX: ZIP) shares have rebounded strongly despite no price-sensitive news out of the buy now, pay later (BNPL) company.
The Zip share price is $3.41, up 1% today, and up 19.3% since last Friday's close at $2.85 per share.
What is going on?
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Zip shares zig-zag all over the place!
The Zip share price put in a great performance in FY25, rising 110% as the company's new strategy continued to bear fruit.
Zip decided three years ago to abandon its mass global growth strategy in favour of positive cash flow in just a few markets.
For FY25, Zip reported a 30.3% lift in total transaction value to $13.1 billion and a 147% lift in cash EBTDA to $170.3 million.
The company's operating margin almost doubled to 15.8%.
On 20 October, Zip provided a 1Q FY26 update, reporting record cash earnings of $62.8 million, up 98.1% year over year.
The operating margin was 19.5%.
On the day of the report, Zip shares rose 4.3% to $4.61, indicating that investors liked what they saw in the numbers.
The next day, 21 October, the ASX BNPL stock was killed with 9% erased from its market capitalisation.
On the same day, the S&P/ASX 200 Index (ASX: XJO) hit a new record at 9,115.2 points.
Between 21 October and 19 November, Zip shares plummeted 38% to a four-month closing low of $2.84 last Wednesday.
With no price-sensitive news from Zip during this time, it's likely that the stock's fall is attributable to profit-taking.
Pretty understandable given Zip shares had risen another 50% between 30 June and 20 October, building on their 110% gain in FY25.
Blackwattle portfolio managers, Robert Hawkesford and Daniel Broeren, say the Zip share price also fell due to negative sentiment over US credit quality, sparked by the collapse of sub-prime auto lender, Tricolor, amid fraud allegations, and other matters.
Meanwhile, other ASX 200 shares have also fallen since the benchmark index hit its peak.
The ASX 200 is down 5% since 21 October, with the financial sector down 8.2%.
As discussed in another article, all market sectors have experienced a fall since their historical sector high points in 2025.
Financials sit in the middle of the pack, down 9.7%. Materials have fared best, down 3.4%, while tech is the worst performer, down 24%.
Zip shares seemed to find support at about $2.85 apiece last week, and a strong rebound has ensued this week.
Expert tips for the Zip share price
Zip shares were upgraded to a 'strong buy' consensus rating on the CommSec platform in October.
Macquarie has just begun covering the stock. The top broker has a buy rating on Zip with a 12-month share price target of $4.85.
UBS has a buy rating on Zip shares with a more ambitious price target of $5.40.
In their latest update, Hawkesford and Broeren said they saw 'meaningful upside' ahead for the Zip share price.
… the underlying fundamentals and outlook for Zip remain strong and we see meaningful upside from both a re-rating of the stock and the ongoing penetration of BNPL products in the US which has a significant runway, sitting at only ~2% today, vs ~15% and ~20% in Australia and Europe respectively.
