If you're buying Zip Co Ltd (ASX: ZIP) shares, you're likely aware that the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock is well-known for its significant volatility.
And that volatility was on clear display in August.
Zip shares closed on 31 July trading for $2.55. When the closing bell rang on 31 August, shares were changing hands for $2.50 apiece.
This put the share price down 2.0% over the month just past, underperforming the 1.1% gains posted by the ASX 200.
Now, I know a 2% monthly decline doesn't sound particularly volatile.
But here's the thing.
On 20 August, Zip stock rocketed 18.2%.
The following day, shares crashed 15.7% as profit-taking looks to have taken the lead.
It's enough to have you reaching for your Dramamine.
Here's what's been happening.
Image source: Getty Images
What's been sending Zip shares on a wild ride?
August saw a few headwinds pick up for the ASX 200 BNPL stock.
Among these were rising expectations that inflation in its two dominant markets, Australia and the United States, may take longer than hoped to bring down within those countries' central bank target ranges.
That's led to higher prospects of interest rate hikes from both the US Fed and the RBA. And BNPL stocks like Zip shares have proven highly sensitive to interest rate moves.
Investors also have high growth expectations for the company. Which Zip delivered on when it reported its FY 2026 results on 20 August.
What did Zip report for FY 2026?
If you've been paying attention, you'll have noted that 20 August was the day that Zip shares surged 18.2%, closing the day at $3.05 apiece.
Investors were overheating their buy buttons after the company achieved some record-breaking results.
Over the 12 months, Zip increased its active customers by 3.7% from FY 2025, up to 6.5 million. And the company saw a 27.2% lift in its total transaction volume (TTV) to $16.7 billion, driving a 24.7% increase in full-year revenue to $1.34 billion.
Zip also achieved record cash earnings before taxes, depreciation and amortisation (EBTDA) of $268.9 million, up 57.9% year on year.
And with the BNPL stock's operating margin increasing by 4.2% to 20% in FY 2026, Zip posted a net profit after tax (NPAT) of $116.4 million, up 45.7% from the prior year.
The company also expects to deliver more earnings growth in the current financial year, targeting cash EBTDA of $340 million in FY 2027, representing a 26% increase from FY 2026.
Commenting on the results that sent Zip shares flying on the day, CEO Cynthia Scott said:
Our focus on exceptional customer experiences is translating into stronger engagement. In the US, we achieved more than 40% growth in both TTV and revenue for a second consecutive year while adding new customers at scale.
In ANZ, we returned to revenue and Australian receivables growth, led by the continued success of our Zip Plus product.
