$3 Party, page-4168

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In our opinion, Zip is a bull market stock which has experienced eye watering volatility over the years, from under $1 up to $14 in 2021 and back down to 30c. It now trades around $2 having pulled back from $3.60.

This stock is not for the faint hearted, and while it’s up from the recent lows of $1, the recent operational performance has underpinned the move, with momentum in the third quarter building on prior periods.

Growth in Zip's US business is the key. Bad debts have been a concern in the past, though they have remained well contained. Zip reconfirmed its two-year targets at the last quarterly update, while also increasing FY25 earnings guidance to at least $153 million, up from $147 million. To put this into context, Zip booked $69 million in FY24.

This is a proper growth company, with consensus expectations for revenue growth to compound at 20% for the next 3-years, with greater scale driving better margins. If they achieve this level of growth, we suspect the shares will be trading well north of $3.

Market Matters is now bullish on Zip at around the $2 mark.

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