How did the Zip (ASX:Z1P) share price respond last earnings season?

Could last earning season give Zip investors any pointers?

| More on:

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 Zip Co Ltd (ASX: Z1P) share price has struggled to deliver meaningful shareholder returns in the last 12-months, with every major move up met with a mitigating selloff.

With highly anticipated full year FY21 results right around the corner, could investors learn anything from last year's results?

A happy woman stands outside a building looking at her phone and smiling widely.

Image source: Getty Images

What happened last earnings season?

The buy now pay later (BNPL) sector was running hot right before earning season last year.

Between 1 and 26 August, the Zip share price managed to rally 62.5% from $5.94 to $9.65.

This move up was fueled by a QuadPay trading update on 24 August and an Ebay partnership announcement on 26 August.

It looked as though investors had been buying the rumour and selling the news, as the Zip share price would tumble following the release of its FY20 results on 27 August.

The FY20 results would highlight record figures across the board with revenue increasing 91% to $161 million, transaction volumes lifting 87% to $2.1 billion and a 62% increase in customers to 2.1 million.

On the day of its full year results, the Zip share price would rally 8.39% on open to $10.46, before selling pressure would drag the company's shares to a negative close of 4.66% to $9.20.

The Zip share price would continue to tumble in the following days, hitting a low of $5.83 by 14 September.

What should investors note about this earning season?

It looks like it has become increasingly difficult to 'wow' investors.

Take Zip's fourth quarter results for example.

The company delivered triple digit growth across most key operating metrics.

During the quarter, Zip's revenue increased 104% year-on-year to $129.9 million, transaction volumes jumped 116% to $1.8 billion and customers increased 87% to 7.3 million.

The update also delivered the company's first quarter of trading in the UK, with "strong growth in transaction volume and customer numbers".

In addition to organic launches in Canada and Mexico.

And noted that the Europe and Middle East acquisitions are expected to be finalised in Q1 FY22 and Q2 FY22 respectively.

Despite the good news, the Zip share price would open 2.90% higher to $7.80 before sliding 7.92% lower by market close to $6.98 on the day of the announcement.

Zip share price snapshot

The Zip share price is up 40.7% year-to-date with most of these gains taking place between January and February.

In terms of its FY21 performance, Zip shares have nudged 4% higher.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on BNPL shares

Happy woman shopping online.
BNPL shares

Up another 9%, how much higher can Zip shares go?

Zip is up 36% in the past 5 days and some experts think it can still double in value.

Read more »

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

$10,000 invested in Zip shares one month ago is now worth…

Zip shares have come roaring back in recent weeks, smashing short sellers and delighting stockholders.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
BNPL shares

Why are Zip shares rocketing 24% today?

This buy now pay later provider released a strong update this morning.

Read more »

A man in a suit looks surprised as he looks through binoculars.
BNPL shares

Why are Zip shares flying 9% higher today?

Find out what brokers are tipping for Zip shares over the next year.

Read more »

A boy with sad eyes pulls the zip over his mouth and nose while doing up a large jacket where the collar stands up at head height.
BNPL shares

Zip shares plunge again after yesterday's 19% surge. Here's what changed

Zip shares tumble as ceasefire hopes fade and volatility returns.

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
BNPL shares

Are Zip Co shares a buy right now?

Down 40% in 2026, is now the time to buy Zip Co shares?

Read more »

A man clenches his fists with glee having seen the share price go up on the computer screen in front of him.
BNPL shares

Are Zip shares still a buy after soaring 20%

Zip shares are now 67% higher than this time 12 months ago.

Read more »

Happy woman in purple clothes looking at ASX share price on mobile phone.
Broker Notes

Down 50% in 2026, Zip shares are 'one of the most compelling value opportunities on the ASX'

Blackwattle portfolio managers Robert Hawkesford and Daniel Broeren provide their assessment of this ASX financial stock.

Read more »