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What does the future look like for the Zip (ASX:Z1P) share price?

Where does the BNPL company’s share price go from here?
The post What does the future look like for the Zip (ASX:Z1P) share price? appeared first on The Motley Fool Australia. –

The Zip Co Ltd (ASX: Z1P) share price has had a rollercoaster year thus far.

Shares in the buy-now-pay-later (BNPL) company started the year at around $5.40. By mid-February, the Zip share price had rocketed to an all-time high of $14.53.

Since then, shares in the BNPL player have been harshly sold-off by investors who are currently trading in the $7 range.

Let’s take a look at what’s been moving the Zip share price and where it goes from here.

Afterpay takeover fueling Zip share price

The Zip share price has had a strong start to the month, surging more than 14%.

The bullish price action is largely due to the recent news from BNPL market leader Afterpay Ltd (ASX: APT). Earlier this week, it was revealed that US financial payments company Square Inc (NYSE: SQ) had offered a $39 billion takeover offer for the BNPL behemoth.  

As a result, the BNPL sector as a whole has been on fire since the news. The Zip share price has been a key beneficiary from renewed interest in the sector.

Zip shares a potential takeover target

Afterpay’s purchase offer has also heightened investor expectations that Zip could be a potential takeover target.

Most recently, Swedish-backed BNPL provided Klarna increased its stake in Zip. Klarna, which is also part-owned by the Commonwealth Bank of Australia (ASX: CBA), reportedly took a 4% stake in Zip to consolidate its market share.

As the second-largest BNPL operator in Australia, shares in Zip have received extra attention following the company’s expanding international presence.

Neither Zip nor Klarna have responded to the speculation.

Outlook for the Zip share price

Recently, a note from Citi highlighted a buy rating on the Zip share price, with the broker initiating an $8.90 price target.

According to analysts, the acquisition of Afterpay could increase the takeover appeal in Zip.

In addition, the outlook for the Zip share price is also dependant on how the company performed for the financial year.

In its most recent quarterly update, Zip flagged a 116% year on year increase in quarterly total transaction volume (TTV) to $1.8 billion.

In addition, the company reported a 104% increase in quarterly revenue to $129.9 million.

Currently, there is no published date on when Zip will report its results for the full year.

The Zip share price closed yesterday’s trading session at $7.57.

The post What does the future look like for the Zip (ASX:Z1P) share price? appeared first on The Motley Fool Australia.

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More reading

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Here’s why the Zip (ASX:Z1P) share price is rocketing 8%

Motley Fool contributor Nikhil Gangaram 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, Square, 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.

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