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

Businessman smiles with arms outstretched after receiving good news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a lucrative return to trading for investors this Tuesday.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Austal, Botanix, DroneShield, and NextDC shares are storming higher today

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

Read more »

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Share Gainers

The Coronado Global share price just surged to a 114% weekly gain. Here's why

Investors have sent the ASX coal stock flying higher in June. But why?

Read more »

Market up or down
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough end to the week...

Read more »

Man in an office celebrates at he crosses a finish line before his colleagues.
Share Gainers

4 ASX 200 shares racing ahead of the benchmark this week

ASX investors sent these four stocks soaring 12% to 18% this week. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why BHP, Coronado Global, EBR Systems, and Whitehaven Coal shares are pushing higher today

These shares are ending the week on a positive note. Let's find out why.

Read more »

a young woman looks happily at her phone in one hand with a selection of shopping bags in her other hand.
BNPL shares

Up 87% since April, why the Zip share price can keep flying higher into 2026

A leading fund manager expects more outsized gains from Zip shares ahead.

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 miserly session for investors today.

Read more »