Zip Co Ltd (ASX: ZIP) shares are trading in the red again on Tuesday. At the time of writing the shares are down 0.98% to $3.03 a piece.
The latest decline means the shares have now dropped 9.55% for the year-to-date but are 0.66% above the trading price this time last year.
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What dragged Zip shares lower so far this year?
Zip shares jumped over 11% in just two days of trade earlier this month after positive market sentiment for buy-now-pay-later (BPNL) stocks boosted investor confidence. But the hike was short-lived.
However last week, Zip shares plunged 13.24%. There was no news out of the company at the time to explain the decline so it was more-than-likely linked to investors selling off their stock and taking profit.
What's next for the business in 2026?
There have been plenty of ups and downs for the Australian financial technology company over the past year, but the business continues to show strong and improved earnings.
In the first quarter of FY26, the company said that its total transaction value grew 38.7% to $3.9 billion and income was up 32.8% to $321.5 million.
At the time, the company said it is on track to meet its FY26 results target.
Meanwhile, Zip is also working on broadening its product range beyond the traditional BNPL options. In late October, the company announced that its US segment is expanding its partnership with programmable financial services business, Stripe.
Zip has said it is still considering a secondary sharemarket listing in the US which would reduce dependence on Australian markets and potentially introduce more opportunity for business expansion. A dual listing on Nasdaq could help the business tap into US capital markets and boost its valuation among US-based investors.
The next major update out of the company is expected next month. Zip plans to post its FY26 half-year results h on the 19th of February. Investors are expecting that the company will reveal news about whether the business is still on track, any news about the potential US expansion, and an update on transaction growth.
Are Zip shares a buy, hold or sell?
Despite a lacklustre start to the year so far, analysts seem to be bullish that there is plenty more upside ahead for Zip shares. I certainly think the stock is a screaming buy for 2026.
Analysts at UBS have a buy rating and price target of $5.20 on the BNPL provider. The broker said that significant share price weakness has created a buying opportunity for investors.
Analysts at Citi also have a buy rating on Zip shares, and a price target of $4.30. The broker is predicting total transaction value (TTV) growth of 43% in the second quarter.
TradingView data shows that the majority of analysts have the same bullish sentiment. Eight out of 10 have a buy or strong buy rating on the shares. The maximum target price is $6.11, which, at the time of writing, implies a potential 104.01% upside ahead over the next 12 months.
