Zip shares have been on fire in August…
The post Up 20% in 10 days: Can the Zip (ASX:Z1P) share price keep rising? appeared first on The Motley Fool Australia. –
The Zip Co Ltd (ASX: Z1P) share price was on form again on Tuesday and continued its positive run.
The buy now pay later (BNPL) provider’s shares climbed 1.5% to end the day at $7.99.
This latest gain means that the Zip share price is now up an impressive 20% since the start of the month.
Why is the Zip share price up 20% in 10 days?
Investors have been bidding the Zip share price higher this month following news that rival Afterpay Ltd (ASX: APT) is to be acquired by US payments giant Square.
This has sparked hopes that Zip may also receive a takeover approach of its own in the near future. Particularly given how another larger BNPL rival, Klarna, is rumoured to have been building up a strategic stake in the company.
Is it too late for investors to buy its shares?
The good news is that the team at Citi still see a fair bit of value in the Zip share price at the current level.
This month the broker retained its buy rating and $8.90 price target on the company’s shares. This is despite its belief that the Afterpay-Square deal has mixed implications for Zip.
Commenting on the news, Citi said: “We see mixed read-throughs for Zip from Square’s takeover of Afterpay – on the one hand it increases the takeover appeal for Zip, especially given the fast growing US business. However, arguably the Afterpay sale speaks to the importance of scale especially given increasing competition and our concern is that the combination of Square and Afterpay increases the medium-term risk for Zip given it increases.”
Based on the current Zip share price of $7.99, Citi’s price target implies potential upside of just over 11% over the next 12 months.
Should you invest $1,000 in Zip right now?
Before you consider Zip, you’ll want to hear this.
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*Returns as of May 24th 2021
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.