Here's why the Zip Co Ltd share price is soaring today

Z1P Co Ltd (ASX:Z1P) is challenging rival AfterPay Touch Group Ltd (ASX:APT).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Z1P Co Ltd (ASX: Z1P) share price is 15 cents or 6% higher this morning after the buy-now-pay-later star reported record quarterly revenue of $23 million for the quarter ending March 31 2019, which is up 20% on the prior quarter. It also reported it has a total of 14,363 retailers signed up which is up 13% on the prior quarter and 60% on the prior corresponding quarter.

Both the group's cash operating costs as a percentage of sales, and cash cost of sales as a percentage of receivables, also reduced by 50 basis points and 10 basis points respectively, in a sign that its underlying operating metrics are tracking in the right direction if somewhat slowly.

A slight disappointment is that total transaction volume fell 8% over the quarter, compared to the prior quarter with total transactions also flat, although it must be remembered that the Christmas quarter is when a lot of consumers do most of their shopping.

Z1p also raised $56 million over the quarter as it needs to invest as it's obviously in a land grab race for market share with competitor, first mover, and market leader AfterPay Touch Group Ltd (ASX: APT).

However, it's worth noting that Zip's market cap still sits well below $1 billion, compared to AfterPay's $5.6 billion valuation largely thanks to investors anticipating AfterPay shooting the lights out in the U.S. market.

While another buy-now-pay-later start-up in Splitit Ltd (ASX: SPT) today reported that it had signed up just 57 retailers over the 3 months to March 31 2019, but that's not stopped 'traders' sending the shares up 24% today.

On my maths at its current retailer sign up rate it would take Splitit around 111 years just to get where AfterPay is today. I'm all for investing for the long-term, but Splitit shareholders might to find the Holy Grail Cup of eternal life unless the company ramps up its performance in the short term.

While bargain hunters might want to do some more research into Z1P Co given it's still growing at healthy double-digit rates.

Motley Fool contributor Tom Richardson owns shares of AFTERPAY T FPO. You can find Tom on Twitter @tommyr345 The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

How an $8k investment in this ASX All Ords stock one-year ago is worth $58,182 today

The ASX All Ords stock has enjoyed a stellar year. But why?

Read more »

Young girl drinking milk showing off muscles.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors finally caught a break this Friday.

Read more »

Four people on the beach leap high into the air.
Share Gainers

4 ASX All Ords stocks shrugging off the looming 2025 market correction and charging higher

If the ASX All Ords enters a 2025 market correction, don’t blame these soaring stocks!

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why Catalyst Metals, Droneshield, Liontown, and Northern Star shares are charging higher

These shares are ending the week with a bang. But why?

Read more »

A happy young boy in a wheelchair holds his arms outstretched as another boy pushed him.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors were once again selling this Thursday...

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Share Gainers

Why Austal, Boss Energy, Capricorn Metals, and Ora Banda shares are charging higher today

These shares are having a decent session on Thursday. But why?

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a woeful Wednesday for ASX investors today.

Read more »

Hiker man backpacker with hands up in the summer mountains with cloudy sky.
Share Gainers

3 ASX shares leaping to new 52-week highs in today's sinking market

These ASX shares are shrugging off the broader market jitters to hit new 52-week plus highs.

Read more »