Zip Co Ltd (ASX: ZIP) shares pushed higher on Tuesday.
The buy now pay later (BNPL) provider's shares rose 2.5% to $1.44.
This appears to have been driven by news from across the Pacific.
Image source: Getty Images
What gave Zip shares a boost?
There were fears last year that tech behemoth Apple Inc (NASDAQ: AAPL) was going to steal market share away from Zip in the United States with the launch of Apple Pay Later.
However, less than a year after launching its BNPL offering, the iPhone maker has decided to discontinue the service. This means one less player for Zip to compete with in the lucrative US market.
According to a press release, Apple decided to scrap its Apple Pay Later service after announcing that third-party services would be integrated into its upcoming iOS 18 software. It commented:
Starting later this year, users across the globe will be able to access installment loans offered through credit and debit cards, as well as lenders, when checking out with Apple Pay. With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the US.
In addition, it is worth noting that the new service will be made available globally (not just in the US) through the company's Apple Pay platform with the launch of iOS 18. It adds:
Our focus continues to be on providing our users with access to easy, secure and private payment options with Apple Pay, and this solution will enable us to bring flexible payments to more users, in more places across the globe, in collaboration with Apple Pay enabled banks and lenders.
What is unclear, though, is whether Zip will be one of the third-party providers that will be integrated into the software. If it is, it could be a big boost to Zip's growth in the coming years.
Conversely, if one of its rivals has the honour of being integrated, it could potentially cause some headwinds for Zip.
Should you invest?
With Zip shares up 205% over the last 12 months, analysts believe that potential upside is now becoming somewhat limited.
For example, both UBS and Ord Minnett currently have buy ratings on the BNPL provider's shares. However, with price targets of $1.55, this suggests that Zip's shares could rise a modest 7.6% over the next 12 months.
This could make it worth waiting for a better entry point and further clarification on Apple Pay's integrations.
