The Zip Co Ltd (ASX: Z1P) share price was in fine form again on Tuesday.
The payments company's shares finished the day 7.5% higher at a record high of $5.19. This latest gain means that its shares are now up a massive 372% since the start of the year.
Why did the Zip Co share price zoom higher today?
Whilst today's strong gain is a bit of a mystery, the rest of its gain in 2019 has been driven by its impressive growth in FY 2019 and positive outlook for the future.
In FY 2019 Zip Co reported a 138% increase in revenue to $84.2 million thanks to a 108% lift in transaction volume through its platform to $1,128.5 million. This was driven by an 80% increase in customer numbers to 1.3 million, a 54% jump in partner numbers to 16,000, and a whopping 154% increase in transactions processed to 4.8 million.
Pleasingly, this strong form is expected to continue in FY 2020. Management explained that it is confident in its ability to drive growth, achieve its targets, and expand the Zip Co business globally with a deliberate lift, shift and scale strategy.
If it were to achieve its targets, then it would mean almost doubling its customer numbers and transaction volume. In FY 2020 the company is targeting 2.5 million customers with an active Zip account and $2.2 billion in annualised transaction volume.
I suspect there's a very strong probability of the company achieving its targets. Especially given how popular the payment method is becoming, the growing number of retailers on the platform, and its international expansion plans.
In respect to its global expansion, Zip Co recently announced the acquisition of PartPay. This acquisition gave it an immediate foothold into New Zealand, the UK, the United States and South Africa.
As we have seen with Afterpay Touch Group Ltd (ASX: APT) and its international expansion, this has the potential to take its growth to the next level. Especially given how management estimates that the total addressable market is a whopping $22 trillion.
Should you invest?
I think it is fair to say that Zip Co's shares are looking quite expensive after its impressive run. And while a better entry point could emerge in the future, I would still consider a small long-term investment at these prices.
After all, I don't believe there are many shares on the market right now that are as well-positioned for growth over the next few years as Zip Co.
Though, given the multiples it trades on, it is a reasonably high risk investment and may be unsuitable for many investors.
