One of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Monday has been the Zip Co Ltd (ASX: Z1P) share price.
In afternoon trade the buy now pay later provider’s shares are up a massive 10% to $9.60.
This means the Zip share price is now up a remarkable 72% since the start of 2021. As a comparison, the ASX 200 is up around 3% year to date.
Why is the Zip share price surging higher?
Investors have been fighting to buy Zip’s shares this year thanks largely to its impressive second quarter update in late January.
That update revealed that Zip delivered a 103% increase in transaction volume to a record $1.6 billion for the three months ended 31 December.
A key driver of this strong performance was Zip’s US-based QuadPay business.
Despite increasing competition from PayPal and Shopify, QuadPay reported a 217% increase in transaction volume to $673.1 million. This was driven by a 180% lift in customer numbers to 3.2 million and a 655% jump in merchants to 8,400 in the world’s largest retail market.
What about today’s gains?
Today’s gain in the Zip share price appears to be attributable to the aforementioned QuadPay business.
Thanks to its huge success, Zip is rumoured to be considering a secondary listing in the United States.
According to the AFR, management will spend the next few days in front of US investors, highlighting the meteoric growth of QuadPay.
By issuing American Depository Receipts that would mirror its ASX-listed shares, Zip would be able to trade in the US, giving it greater access to US capital markets.
The AFR notes that this would allow institutional investors who cannot invest in the ASX because of investment mandates to buy shares. However, according to the report, discussions regarding the US listing are believed to be at an early stage.
Though, there does appear to be substance to the rumours. A number of brokers are understood to be pitching secondary listings of a range of Australian technology shares that they think could attract US investor interest.
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Returns as of 6th October 2020
More reading
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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