The Zip Co Ltd (ASX: ZIP) share price is at it again.
And by 'it', I mean notching new multi-year highs.
Shares in the All Ordinaries Index (ASX: XAO) buy now, pay later (BNPL) stock closed yesterday trading for $1.75. Currently, shares are changing hands for $1.76, up 0.7%.
As you can see on the chart below, this marks a new two-plus year high for the company.
In fact, you have to go all the way back to February 2022 to find the Zip share price trading at higher levels.
With another day in the green today, the Zip share price is now up 327% since this time last year. To put that in some perspective, that's enough to turn a $5,000 investment into $21,350 in just 12 months!
Image source: Getty Images
What's been driving the Zip share price higher?
While there's still a long, long way to go for the Zip share price to potentially reset the $12.35 a share the BNPL stock was trading for on 19 February 2021, the company has clearly turned a corner over the past nine months.
Part of that comes amid a change in management and strategy, shifting away from an uncompromising growth strategy to one focused on returning the company to profitability. That strategy is proving successful to date, with Zip's losses continuing to narrow amid rising revenues.
The company's most recent quarterly results, Q3 FY 2024, came out on 16 April.
Highlights included a 14.6% year on year increase in total transaction volumes (TTV). TTV came in at $2.4 billion for the three months.
While the company's Australian business hit some headwinds, its Americas business grew strongly, with TTV in the Americas up by 43.6% from Q3 FY 2023.
And with Apple Inc (NASDAQ: AAPL) announcing in June that it was pulling its United States BNPL service, Apple Pay Later, investors may be optimistic about Zip's American growth prospects in the year ahead.
Then there are interest rates.
BNPL stocks have proven highly sensitive to a higher rate environment, as witnessed by the huge sell-down in the Zip share price when global rates first bottomed and then began to rise from their historic lows in 2022.
While Aussies may be waiting until 2025 for the first interest rate cut from the Reserve Bank of Australia, markets are increasingly pricing in at least one rate cut from the US Federal Reserve in 2024.
Any easing by the Fed and other global central banks should come as welcome news to many companies, particularly those in the BNPL space. And it could help the Zip share price continue to outperform.
