Good, you know the reasons, and now you just need to change your bias. Do you know that increased restricted cash applies to all BNPL/credit card providers? Do you know how much debt Visa or Master card has? Do you think they will be killed by their bad debt? Do you think ZIP's bad debt rate for its US business (which is dominating their income) is high compared to the average? You'd better check the numbers. I agree the AU business is not ideal due to historical reasons and AU macro-environment. Therefore, ZIP is reducing the debt. They have receivable of 2032M and bad debt rate is 4.2% of TTV, so the final receivable will be 2032*(100%-4.2%)=1946M (now you know why using percentage of TTV rather than revenue is a better option), which can fully pay off its debt of 1900M. Then ZIP will hold cash and liquidity of at least 340M plus a US business which should be valued at 3.8B compared to peers (so MC = 4.1B). Then how would you think ZIP will be killed by its total debt/bad debt?
ZIP Price at posting:
$3.10 Sentiment: Buy Disclosure: Held
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