The Bear Room, page-3552

What will drive the price up is the fact that Zip is playing in a space with a huge total addressable market.Consumers want flexibility with payment options, and just about everyone is buying more and more things online these days.More and more online shopping means more and more market share for Zip.

I know some love to point outthe fact that Zip’s customers dropped by 3% or so, but that means nothing.We’re talking 3% of a 6 million customer number.What is far more important is the number of merchants on the platform.More merchants mean more shopping options for every single Zip customer.If the offer is a 9.6% increase on merchants and a 2-3% decrease on customers in a FY as the company is growing, I’ll take that for another five years or so any day of the week.

There’s far more profit to be made in a business model where there is 900 customers but 2000 different merchants that can use a platform to make payments with, then there is to have1000 customers with only 1000 merchants to transact with.The argument that a 3% decrease in customers is a bad thing whilst ignoring the fact that there’s been a 9.6% increase in merchants just doesn’t stack up.

Also, transactions through repeatable customers is key to Zip’s success.Far more beneficial than just relying on increasing total customers, of which a large amount may just be dormant and use the platform every now and then. More merchants = higher TAM, which equals higher revenue and profits.The total transactions through the platform increased by 28% last FY.That’s crazy, and a stat that actually matters as Zip takes a clip on all transactions.Does it really matter if a company lose 2-3% of their customers while increasing the total transactions by a whopping 28%?Spoiler alert, it don’t mean sh!t.

It's also unfair to be criticising a company for poorly managing customers who can’t pay their debts and then criticisethem again when they become a bit more stringent with their acceptance criteria.Zip is doing all the right things right now.

And none of the above means jack sh!t if the product is no good..As someone that uses Zip regularly, I see time and time again it’s a seamless experience.I’m sure Stonks will see that comment and what to say something along the lines of “Zip is only for poor people or youths that can’t budget”, but that’s nonsense.Zip as a payment platform brings connivence. No need to waste time entering credit details or mailing addresses.Click a button, login and you’re done. It’s a Paypal like experience.And anyone that invests in a company which provides them an opportunity to evaluate their product and they choose not to, well that person is a muppet.I would like to hope that most zip bulls are regular uses of Zip.

I see Zip as company that tried to grow too fast, and it didn’t work.It changed its strategy, started to focus more on its strengths and the pathway to profitably has become clearer. And that’s also the reason why all the analysts out their have had it as a strong buy in recent months.