Zip Co Ltd (ASX: ZIP) shares just closed out a week to forget.
Shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock closed on Friday trading for $1.78, down a painful 25.21% for the week.
As you're likely aware, all of that pain – and then some – was delivered on Thursday, following the release of the company's half-year earnings results (H1 FY 2026).
With the BNPL company reporting solid growth metrics, market expectations were clearly high as investors sent Zip shares plunging 34.4% on the day.
Which, according to Wealth Within senior analyst Fil Tortevski, may have created the "greatest buy-the-dip opportunity" in Zip stock in six years.
We'll get back to the stock's rebound potential in a tick.
But first…
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What did the ASX 200 BNPL stock report?
Zip shares got hammered on Thursday despite the company reporting record cash earnings before tax, depreciation and earnings of $124 million, up 85.6% year on year.
And total income increased 29.2% to $664 million. That was spurred by a 34.1% lift in total transaction volume (TTV), which reached $8.4 billion.
The only potentially concerning item that jumped out at me was the 11% increase in net bad debts, which climbed to 1.73% of TTV for the half.
"Zip continues to increase profitability at scale, driving cash earnings growth of 85.6% and significant operating margin expansion during the half," Zip CEO Cynthia Scott said on the day.
"Following a strong first half, Zip has upgraded its FY26 guidance for operating margin and cash EBTDA as a percentage of TTV while reconfirming its other target ranges," Scott added.
Time to pounce on Zip shares?
Commenting on the market's reaction on Thursday, Wealth Within's Tortevski said:
Although ZIP missed expectations with its HY reporting, a 38% drop in one day is a hefty price to pay because they actually delivered 29% revenue growth, doubled profits, and materially improving margins.
Remember, it wasn't that long ago that this company wasn't profitable at all. The result was operationally strong, but the market is clearly questioning whether current credit conditions represent a cyclical peak.
As for buying the dip on Zip shares, Tortevski added:
Now, with the share price back at COVID low levels, which have historically been the springboard for major runs up in the share price, the argument for buying the dip must be asked.
Take 2020, the stock bounced from $2, rising over 800%. In 2025, it jumped 170% from the same $2 base. And today we sit at the crucial $2 level once again.
Tortevski concluded:
If you don't believe the future credit cycle fear being priced in right now and take confidence in the operationally sound report, then maybe this is the time for the next hundred per cent run up for ZIP begins.
