Explosive start to the week, trading at $1.54 and rising fast,...

Explosive start to the week, trading at $1.54 and rising fast, GLTAH

Shaws report:

Zip Co (Z1P)

Rating: Buy | Risk: High | Price Target: $1.60

Zipping past an inflection point

Event: Z1P has reported 1H19 results in line with prior disclosure, with strong and sustainable growth across all key metrics. Z1P is now operating cash flow positive, demonstrating widening JAWS and starting to enjoy the beginning of substantial network affects. Following a change in analyst responsibilities, coverage transfers to Jonathon Higgins.

Recommendation: Z1P is in a real sweet spot for a number of reasons which include: 1) Structural tailwinds as credit and payments shift to alternative payment and BNPL providers (being multiple years behind US and European peers); 2) Operating leverage continuing to emerge at increasing scale; 3) Recurring earnings building across the book with duration to receivables and increasing repeat customer rate; and 4) Network affects building, with a substantial pipeline within existing customer, merchants and new accreditations. Buy.