ZIP (ASX) Only the Charts

Originally posted by Cheeky-Charm: ↑

ZIP Longs have had a lovely 1,000%+ gain and now I believe the stock has shown many signs that it's needing a significant cool-down. Will share my thoughts below. Sentiment will be made apparent on why I have it as a SELL as it has already gone to thesis as I will outline

I first made a SELL alert on ZIP on 9th December days away after the Top became clearly evident. Attached was the thesis made back then, to help build a timeline to where prices are currently at I was targeting $2.40 as a place to watch. Technicals aswell as a fundamental factor of Insider selling $100M of stock was a decent catalyst to add pressure to share price.

Further on, I made a more detailed chart analysing several indicators such as the RSI & OBV along with the good old basics, support, resistance, price and volume analysis

After a steep uptrend, prices formed what appears to be a left shoulder, spiking to a new high, retracing and then double topping before selling down and popping back up briefly to show signs of a right shoulder forming we have some signs of a head and shoulders playing out.

More bearish signals show OBV having a steep decline, suggesting this sell down on volume is confirming the direction, not to mention RSI has been flagging several blinkers and now after the double top, showed a clear divergence.

The Fibonacci (nowhere near an expert, a real beginner infact) shows a Golden Pocket zone of 0.382 to 0.618 ranging between $2.77 to $2.31. These prices are not far off the 150 EMA with 200 EMA at $1.58. Provided this is ending the downtrend and beginning the distribution phase, we could end up in panic selling. $2.86 is a vital level and could be considered our "neckline". A breach of that could put targets of $2.16 using the top of the double top, and duplicating that below the neckline.

Downside risks seem far larger than the upside now as I suspect any upticks and spikes will be shorted and sold into by longs and shorts adding collective seller pressure.

Attached lastly will be the 15min chart showing some zones. There is a gap upto $3.12, and today's move up has created another gap now at $2.91I can presume many market participants from short term to long term are taking advantage of the ZIP volatility, for me however I wouldn't be playing the long side on this anymore as I feel the risks are far larger now.

Since ZIP also has an emphasis on the U.S Markets, I should state that a former BNPL company called Sezzle once listed on the ASX under the symbol SZL was a PumpNDump here on the ASX. It has been listed on the U.S Exchange and after having a stellar Pump far greater than what ASX saw, it's now heavily in the Dump stage. Whatever happens in the States eventually catches on and I think this could have ramifications on ZIP in the near future.

Here was an article, A juicy read!https://tokenist.com/sezzle-sezl-stock-plummets-after-hidenburg-announces-short-position/ that had a Shortselling Firm do research which caused a -22% collapse in the share price in 1 day, the largest sell-down since it's run up. I think these things all point towards a larger macro event that's cloaked between ZIP's good financials and hyped press releases about history making changes etc etc. Good luck to all holders. Geez and the CEO for locking in $100M at the top? What are they holding back I wonder? To suppress the Retail Panic sell as instos and other funds sell longs and take the reverse

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Originally posted by nakervirus: ↑

I appreciate that you've taken the time to make an indepth post about the reasoning behind your "Sell" view, even if I completely disagree.

Here is a brief summary of why I disagree:
1. Zip is trending upwards over the last 12 months - I don't believe you can say Zip is now a downtrend just because it is lower than early December - that is too short of a period during a volatile period, and has basically gone down just like the rest of the market during this period. Just look at the VAS asx over the past month to see the similarity to Zip.
2. Zip is vastly undervalued compared to its peers (Sezzle and Affirm). Sezzle is also up 1300% in the last 12 months so I hardly think you can call a 22% drop a collapse while ignoring the massive run up.
3. Larry has been involved in the company for many years and the company is entering a new stage, and it is understandable that he wants to move on with other things in his life and move back home to Australia etc. I don't think this is a point of concern at all, and he didn't sell his entire holding either. Nothing wrong with him locking in some gains, and he definitely hasn't locked them in at the top - Zip will go much higher than $3.50 over the next 12 months.
4. Independent reports indicate that BNPL is becoming more and more popular, and is showing huge growth over the next 5 years in the sector as consumer habits change.
5. Inflation is settling down, and interest rates are going down. This reduces Zip's funding costs (which increases profitability), and strengthens the consumer (more spending and less bad debts).
6. Zip is focusing more on marketing and customer growth now that they are cash flow positive and a profitable company - they have shown they can survive the harsh macroeconomic environment (high interest rates etc) over the past few years, and now things have turned and the environment is becoming one in which they can thrive.
7. Expanding more on the above, the US is a huge market with minimal BNPL penetration ensuring there is ample growth available. Zip's US growth has been phenomenal, and their leadership team has been fantastic and Cynthia Scott has forecasted that they will continue to grow extremely well in the US over the next 12 months (30%+ growth).
8. Zip has new products that have been proven to increase revenue/profits and still being rolled out. The continued roll out of these products will keep increasing the profitability/growth etc for at least 12-24 months (e.g. physical card in the US, pay in 8 in the US, Zip Plus in Aus).
9. Zip has also looked at adding other products to diversify their revenue stream, add additional revenue etc, without costing much - for example referral bonuses to brokers/banks for home loans, personal loans etc.
10. Weak Aussie dollar will help the company further as well - all the US revenue will be convered to Aussie revenue at a more favourable rate. In addition, a weak AUD makes the company much more attractive for potential US buyers.

I see barely any downsides, so I think it's completely incorrect to say the downside risk is higher than the upside risk. It is pretty much all upside over the next 12 months and I'll be surprised if Zip is less than $5 by end of 2025.

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Thanks for your post. It really helped hearing differing views.