Insights

Zip (ASX:Z1P) share price bounces as US rebrand puts a dent in traffic

Data points to potential rebranding teething issues for US operations…
The post Zip (ASX:Z1P) share price bounces as US rebrand puts a dent in traffic appeared first on The Motley Fool Australia. –

The Zip Co Ltd (ASX: Z1P) share price is back in focus on Friday morning. Recent insights shared by a leading broker have cast doubts on the rebranding of Quadpay in the United States.

Shares in the buy now, pay later (BNPL) company slipped 2.48% yesterday. At the end of the session, the Zip share price stood at $6.69. However, shares are bouncing back in early trade today, swapping hands for $6.89 at the time of writing.

It has been a testing month for Zip investors, with the value of their holdings falling 14% over the past 30 days.

Here’s a look at what analysts think of the latest change in tack for Zip’s US operations.

Coincidence or consequence?

In July, Zip released a quarterly update noting its plans to rebrand its Quadpay business as Zip in August. The company initially acquired Quadpay in September 2020. Since then, the Quadpay business has been a growth engine for the BNPL competitor.

To illustrate the importance of its US operations, in the last financial year, the company’s Australia and New Zealand operations grew by 40% in terms of revenue. Meanwhile, Zip’s US segment experienced a 269% increase in pro-forma revenue year-over-year.

Understandably, shareholders and analysts would be keeping a close eye on how Zip’s US operations are tracking. This brings us to an analysis conducted by Citi, putting the Zip share price in focus on Friday.

According to Citi, since Quadpay has been rebranded to Zip web traffic and app downloads have slumped. While app downloads have been impacted to a lesser extent, traffic to the website has declined rapidly. Taking a look for ourselves, Similarweb shows web traffic for Quadpay dropping from 3.75 million in July to 2.04 million in August.

Although, the analysts considered that perhaps transaction volume is not significantly impacted if app usage remains elevated.

In its note to clients, Citi analysts wrote:

App downloads seem to be less impacted, however total app downloads declined for the 5th consecutive month which points to downside risks to our customer growth forecasts.

In our view, increasing app usage has been a key driver of Zip’s TTV growth in the US in recent quarters – app usage has remained stable in recent months which suggests that overall transaction volumes may not be impacted.

Potential risk to Zip share price

The analysts concluded that the decline in traffic following its rebrand presents a risk. Specifically, the broker highlighted downside risk to its forecasts for its first-half result in FY2022.

Unfortunately, the mounting concern comes at an already tumultuous time for the Zip share price as competition heats up. Yesterday, we covered Paypal Holdings Inc (NASDAQ: PYPL) entrance into Japan’s BNPL market. The payments company acquired Paidy for US$2.7 billion to get its foot in the door of another geography.

On top of this, US-based Affirm Holdings Inc (NASDAQ: AFRM) has been making moves, being the first BNPL provider to partner with Amazon.com Inc (NASDAQ: AMZN).

The post Zip (ASX:Z1P) share price bounces as US rebrand puts a dent in traffic appeared first on The Motley Fool Australia.

Wondering where you should 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 could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

Here’s why the Zip (ASX:Z1P) share price is underperforming the tech sector over the past year
3 excellent ASX 200 (ASX:XJO) shares that could be buys

Zip (ASX:Z1P) share price struggles as BNPL competition heats up
How have ASX BNPL shares performed during the August 2021 earnings season?

The Zip (ASX:Z1P) share price has plunged 30% in 5 months. Is it a buy?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler 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 Affirm Holdings, Inc., Amazon, PayPal Holdings, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon, long January 2022 $75 calls on PayPal Holdings, and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Amazon and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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!