Insights

Why the Zip (ASX:Z1P) share price is volatile today

Here’s why the Zip Co Ltd (ASX:Z1P) share price is bouncing around on Tuesday following its major announcement yesterday…
The post Why the Zip (ASX:Z1P) share price is volatile today appeared first on The Motley Fool Australia. –

The Zip Co Ltd (ASX: Z1P) share price is having a bit of a mixed day on Tuesday.

In early afternoon trade, the buy now pay later (BNPL) provider’s shares are back in the blavk and up 1% $7.17.

Why is the Zip share price bouncing around?

The Zip share price appears to have come under a little bit of pressure today following a mixed reaction to its expansion announcement on Monday.

In case you missed it, Zip has announced that it is expanding into the European and Middle East markets via the acquisitions of established player in both markets.

In Europe, Zip will acquire the shares it doesn’t already own in Twisto Payments for 89 million euros (~A$140 million). Whereas in the Middle East, the company is acquiring the shares it doesn’t already own in UAE-based Spotii for US$16 million (~A$21 million). This will give Zip access to a $1.1 trillion annual ecommerce market in Europe and a Middle East market that is growing fast.

The acquisition of Spotii is expected to complete in the third quarter of calendar year 2021, whereas the Twisto acquisition is expected to complete in the fourth quarter.

What was the reaction?

Analysts at UBS have been running the ruler over Zip’s plans and sees both positives and negatives.

According to the note, the broker wasn’t surprised with the acquisitions and acknowledges that the two markets provide the company with significant growth opportunities.

However, it believes the businesses will require significant amounts of capital in order to scale.

Its analysts commented: “While the potential total addressable market for both businesses is large, both businesses are relatively early stage, we also highlight the capital intensity of both businesses if they are to scale.”

This could mean that another capital raising will be required in the not so distant future in order to grow these businesses.

Unfortunately, as we have seen previously with the Zip share price, capital raising speculation often weighs on investor sentiment and could potentially limit the upside from here for the time being.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

More reading

Leading brokers name 3 ASX shares to sell today

ASX 200 up, Zip rises, Aristocrat Leisure reports

Is the Zip (ASX:Z1P) share price in the buy zone?
Why Corp Travel, Domino’s, Kogan, & Zip shares are storming higher

ASX 200 up 0.1%: Aristocrat results, Zip’s global expansion continues

The post Why the Zip (ASX:Z1P) share price is volatile today appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!