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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Stock of the day: Zip

Explore why analysts remain bullish on Zip Co despite its 30% share price decline in 2025, with 40% US growth offsetting concerns about rising bad debts as rival Klarna prepares its $1 billion IPO.

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This video was created on 7 March for IG audiences by ausbiz.

ASX code: ZIP

Zip Co's market position and share price challenges

Zip Co shares have declined approximately 30% since the start of 2025, including a 3% drop in today's session. This comes as Swedish rival Klarna prepares to file for its initial public offering (IPO), reportedly seeking to raise at least $1 billion.

Despite the recent share price weakness, Zip was one of the "comeback kids" of the previous year, delivering substantial returns for investors who backed the buy now, pay later (BNPL) provider.

Strong growth fundamentals despite market sentiment

Analysts remain confident in Zip's investment thesis, pointing to several positive factors:

  1. Impressive US growth: Zip's American operations continue to expand at over 40%, providing a significant growth engine for the company in the world's largest consumer market
  2. Improved domestic profitability: the Australian business is becoming more profitable as management focuses on optimizing operations and returns
  3. New market opportunities: Zip's expansion into additional segments shows promising early results, though specific details weren't elaborated

Potential concerns and balancing factors

While most aspects of Zip's recent performance update were positive, several potential concerns emerged:

  1. Increased cash margin: the company reported a rise in its cash margin, which could impact profitability
  2. Expanded bad debt provisions: Zip has needed to increase provisions for bad debts, reflecting potential challenges in the consumer credit environment
  3. Higher than expected capital expenditure (CapEx): the company's investment in its platform and capabilities exceeded market expectations

Despite these concerns, the company's overall results were in line with consensus expectations. Analysts suggest that the current interest rate environment—with rates expected to fall rather than rise—creates a favorable backdrop for non-bank lenders like Zip.


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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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