Why the Zip share price surged as much as 31% on Wednesday

Zip share price surges on eBay Partnership

The Zip (Z1P) share price surged as much as 31% on Wednesday – hitting an intraday high of $9.950 per share – after revealing the launch of Zip Business through a partnership with eBay Australia (EBAY).

Though enthusiasm wore off as the session wore on, Zip last traded at a still-elevated $9.60 per share.

What is Zip Business?

Centrally, the Zip Business platform is aimed at giving merchants on eBay Australia access to flexible lines of credit, which the company said could be used for everything from marketing expenses, inventory purchases and cashflow management initiatives.

Commenting on this exciting launch, Zip’s Co-Founder and Chief Operating Officer, Peter Gray said:

'Zip is extremely excited to formally launch its Zip Business platform to create a suite of products for the small business community, a segment that has been underserved by the traditional lenders in recent years.'

Mr Gray further argued that 'A thriving small business community is critical to the health of the Australian economy and we are deeply committed to supporting the growth of these important businesses.'

In addition to Zip gaining exposure to eBay’s Australian merchant base – which is currently made up of approximately 40,000 small and medium sized Australian businesses – investors were likely attracted to the prospect of further Zip Business rollouts. Specifically, the company noted that today’s eBay partnership marks the ‘first’ of an 'exciting series of integrated product’ rollouts aimed at helping small and medium-sized businesses in Australia.

To fund Zip Business, the company revealed a new debt funding facility provided by the US-based Victory Park Capital Advisors – totalling AUD$100 million.

How to trade Zip, long or short

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Other bits and pieces

Today’s announcement caps off an exciting period for Zip, with the company on Monday reporting on Quadpay’s operational performance across July.

Described as a record month, in July QuadPay reported:

• Transaction volumes of US$70 million, up 600% YoY
• The onboarding of 133,000 new customers
• That it has secured a debt facility totalling US$200 million

Commenting on this strong performance as well as the future potential of the merged Zip-QuadPay entity, the company’s Co-Chief Executive Officer, Brad Lindenberg, said:

'With less than 15% of the Internet retail 1000 offering an interest free BNPL service, we look forward to joining forces with Zip and rapidly accelerating our growth in market.'

For reference, Zip’s Quadpay acquisition has yet to be finalised, with the company noting that shareholders will have a chance to vote on the proposed acquisition at an EGM set to be held on 31 August.

As a combined entity, Zip-QuadPay would boast operations spanning five key countries, annualised revenues of $250 million, 3.5 million customers and a Total Transaction Value (TTV) of $3.0 billion.