How to Buy, Sell and Short Zip Shares

• How to buy or invest in Zip shares
• How to sell and short Zip shares
• Zip share price: the basics
• What is Zip business model?
• Fundamental analysis: how to analyse the Zip share price

How to buy or invest in Zip shares

You can invest in Zip (Z1P) in two ways: either through share trading or derivatives trading. Share trading means that you take direct ownership of Zip stock, meaning you could potentially profit if the share price increases in value or if the company, however unlikely at this stage, decides to pay a dividend.

By comparison to owning the shares outright, derivatives trading – such as CFD trading – allows you to speculate on the price movement of Zip shares without actually taking ownership of them. CFD trading may prove attractive to some investors for a number of reasons, including the flexibility to trade stocks long and short, the ease of which it allows one to hedge, as well as the ability to gain larger exposure to an asset through leverage.

How much would it cost to invest in Zip?

When trading Australian stocks such as Zip online, investors will incur the following charges:

By comparison, when trading derivatives – such as share CFDs – you deal at the real market price, so we don't attach our own spread. Instead, we take a small commission when you open the position, and again when you close it. In each instance, a minimum charge, as outlined below, applies:

*Click here to learn more about IG's Fees and Charges.

How to sell and short Zip shares

After investing in Zip, you might want to sell your position if the share price starts to fall or if you find a better place to allocate your capital. Alternatively, you hold the opinion that Zip's share price will decline in value and as such you may want to short the stock through CFDs, potentially allowing you to generate a profit from falling prices.

This, as with opening a position with IG, can be done in just a few simple steps, described below:

Zip share price: the basics

Zip trades on the ASX under the ticker Z1P and unlike BNPL rival Afterpay, which is classified as a Software & Services company, Zip is classified as a Diversified Financials company under the GICS Industry Group classifications. Zip is also an authorised credit provider.

With the boom in BNPL services across Australia and the globe, Zip has seen its share price hit new highs over the last year, climbing to a 52-week high of $14.53 per share at its peak in February, 2021. At the time of writing, Zip traded at $7.53 per share, implying a market capitalisation of over $4.16 billion. Off it's high, but still well up over the last 12-month period.

At current price levels, Zip currently stands as one of the most valuable BNPL/ installments payments companies on the ASX. Other Australian-listed BNPL companies include Afterpay: market capitalisation ~$29 billion; Sezzle: market capitalisation ~$764 million, Openpay: ~$199 million, and Humm: market capitalisation ~$480 million.

Zip key personnel: who manages the company?

What is Zip’s business model?

Zip – like others in the buy now pay later space – allows its users to make purchases and pay for them over a number of installments. Unlike a number of other providers however, which in many cases focus on a pay it in four approach, Zip offers its users greater levels of flexibility, instead emphasising the idea of 'repay your way'. Here Zip allows users to repay as little as $40 per month, across weekly, fortnightly or a monthly repayment scheme.

Another key difference between Zip and a number of BNPL providers comes from the amount of credit offered to its customers. For example, the company’s Zip Money product is targeted at customers who want to make smaller, discretionary purchases – with its account limit set under $1,000 dollars. By comparison, the company's Zip Money product is aimed at people want to make larger purchases, with an account limit over $1,000 dollars.

Finally and speaking to the diverse scope of the company’s product line up, Zip also provides unsecured business loans of up to $500,000, to applicable businesses – as part of its Zip Business offering.

As with other providers in the space, users can also choose to pay off their outstanding balance all at once. Should users maintain an outstanding balance at the close of each month, for both Zip Pay and Zip Money, the company charges its users a monthly account keeping fee of $6.

Like other players in the space, Zip makes its money by charging fees to merchants when purchases are made through its platform; and from its users, for example, when they have an outstanding balance at the end of each month or when they fail to make a repayment on time.

'Revenue is generated from merchant fees, affiliate fees, interchange, and service fees’ and late fees, Zip noted as part of its latest interim results.

Fundamental analysis: how to analyse the Zip share price

Like many growth stocks, Zip is difficult to analyse or value using traditional financial metrics. Indeed, although the company has experienced exceptional revenue and transaction volume growth in the last few years, the company remains loss making. Despite that, the market is incredibly optimistic about Zip’s future, with the stock trading at ~13.3x sales.

The following metrics have been taken from Zip’s latest set of interim results, for the period ending 31 December 2020.