Zip Co Ltd (ASX: ZIP) shares have fallen into the red again on Tuesday.
After a brief rebound, Zip shares have now fallen around 3% at the time of writing to $2.36 each.
Zip shares have been volatile ever since the stock was caught up in an ongoing sector-wide tech sell-off. Technology and growth shares have also come under renewed pressure again recently as investors reassess valuations and risk appetite. The ASX 200 tech shares continued softening through May as investor sentiment struggled to rebound.
As for today's share price decline. It looks likely that investors are taking their gains off the table after Zip shares rallied around 10% to a two-week high yesterday.
At the time of writing, the buy now, pay later (BNPL) provider's shares are down 29% year to date but are still around 22% higher than this time last year.
For context, the S&P/ASX 200 Index (ASX: XJO) is around 0.4% lower on Tuesday afternoon, and just over 3% higher over the year.
Zip shares might be struggling to regain momentum, but I still think there are compelling reasons for investors to buy the stock. Here are three of them.
Image source: Getty Images
1. Zip's financial results have been positive
Zip's financial results have been robust over the past few quarters. Its latest third-quarter FY26 results announcement in mid-April showed that growth has started to accelerate.
Zip reported a 22.4% year-on-year increase in its total translation volume (TTV). The company also confirmed a 20.2% increase in total income, a higher operating margin of 19.4%, and confirmed it has grown its active customer base by another 3.5%.
The fintech business also upgraded its FY26 group cash EBTDA guidance to at least $260 million, from previous guidance of around $248.6 million.
2. The company is aggressively expanding
Aside from financial growth, Zip is also rapidly expanding its product range and aggressively expanding its global presence, especially in the US.
Late last year, the company announced that its US segment was expanding its partnership with the programmable financial services business Stripe, a move that caused some investor panic at the time.
In early February, the company confirmed it is expanding its US presence by launching a new Pay in 2 product. The new product allows consumers to split a purchase into two instalments paid over two weeks.
Zip is also pursuing a dual sharemarket listing on the Nasdaq in the US. This could help drive an even opportunity for business expansion in the area.
3. Brokers tip a huge upside ahead for Zip shares
TradingView data shows that analysts are very bullish on Zip's outlook over the next 12 months.
All 12 analysts have a buy consensus on the shares, and the average $3.82 target price implies a potential 62% upside.
Some are even more optimistic and tip the shares to increase up to 129% to $5.40 a piece, at the time of writing.
