Hey Pete,
I hope you have been well mate with all the wild weather. Just a quick one for you as unfortunately still holding zip and seen well over 60% of my money disappear. It's hard to remain positive or optimistic on the business in this current macro environment. However, I do have a few questions.
The first one being, if Diane needs to meet a minimum director holding and zip is at one of its lowest points in 2 years wouldn’t now be the perfect time for her to buy? It would instill some confidence in shareholders that you as directors think the share price is undervalued and signal a potential reversal. I get that you have shares already and get performance shares but at this rate what is going to stop zip from making new lows?
Secondly, I understand merging with Sezzle is to make the company more competitive in bidding for enterprise merchants and having greater bargaining power based on customers alone but their financials appear to be worse than zips. They have higher bad debts,not enough capital to continue operating and their NTM was negative 4 basis points. Currently they are losing money per transaction. As interest rates rise and inflation impacts are felt wouldn’t zip want to mitigate as much risk as possible? Reign in the expansion strategy and reduce costs variable costs to reach profitability? Not purchase a company that is losing money at the current interest rate and running out of capital fast.
Thirdly, I noticed in the Q&A the team didn’t answer the question regarding how many active consumers are transacting in 9 months and how many more drop off in 6 months. Is the number significantly less than the almost 10 million? I see that the top 20% transact more than 6x month if even your best cohort are only transacting 6 times a month you aren’t really meeting your own mission statement, “to be the first payment choice, everywhere and everyday”. Everywhere you have satisfied with tap and zip, I use it a lot as it helps me to spread the costs over months for everyday living. However, 6 is a long way from the average transaction per day in Australia of 1.5 or 47 times per month. Point being you have nearly 10 million customers, commonwealth has nearly 16 million and are very profitable. Your goal was to disrupt the market and take customers from banks. You have 62.5% of the amount of comm bank customers and if you were to adhere to your mission statement you may turn a profit.
It feels like you have lost your competitive moat. Zips marketing strategy isn’t catchy, Klarna is in your face all across tik tok and Instagram. I never see zip. Your younger cohort is your main target market yet you are not marketing through their media? You are buying companies to maintain explosive growth but seem to have lost sight of the fundamentals. Your bad debts have increased to half of your revenue, this is not sustainable. You have previously said crypto would be introduced in Q1 but this hasn’t been mentioned yet, with no updates to the market.
It makes it hard for investors to believe you are going to be profitable in FY24 if you can’t stick to these timelines for products spoken about over a year ago. Why are savings, credit builder and crypto taking so long to integrate. Was it because attention was focused on the merger ? If so, why not update the market? If it was because of regulators or pilots showing it was not as well received then update the market and say, “you know what crypto is a dud”. How will savings accounts work in Australia, will zip need to get an ADR license? Will it slowly morph into the thing you are trying to disrupt, banks? Physical cards were introduced but when did they go online, did they have an impact on TTV?The list goes on, you guys made note of the decreasing market sentiment, great it is on your radar but these updates and pivotal information is what is killing the share price more.
Across the board the Instos have dropped price target month after month as zip has continued to underperform against peers. I’m struggling to stay invested after being a strong believer, as inflation and interest rate increases the COGS increases. As competition increases margin pressure will increase as already seen going from historical 7% down to 6.5%. What is the positives moving forward, when will BOA stop shorting the stock to $0?
I saw zip being compared to AMP today and thought shit I guess the share price has gotten that bad. I reflect on my days sitting in finance classes at Uni and wonder why people didn’t sell on such steep declines yet here I am still holding. This message is just to demonstrate an avid user of zip and a strong believer in the company is waning as opportunities are missed and my invested capital disappears.
Please update the market with product streams, please decrease the integration time to bring them online and will one of you please invest in zip to instill confidence within the market. Thanks
anyone have anything else to add before I hit send.
Expand
