Look who just landed more than $2 million worth of Zip shares

The Zip Co Ltd (ASX: ZIP) share price has been largely unmoved by news the company has handed over 2.5 million new shares to the vendors of Quadpay.

The embattled ASX buy now, pay later (BNPL) share issued the new shares as part of its acquisition of the US BNPL.

The handover was approved by Zip’s shareholders at an extraordinary general meeting back on 31 August 2020.

New share issue doesn’t faze shareholders

The Zip share price is currently down 1.71% in afteroon trade to 86 cents. This puts the value of the new share consideration at $2.15 million.

But the takeover could be the last one Zip does for a while with its expansion plans largely derailed. The BNPL world has dramatically changed with surging inflation forcing central banks to aggressively hike rates.

When money was cheap, interest-free type offerings could generate good profits. But with rates rising quickly and government regulators tightening oversight of the sector, the next few years could be challenging.

Zip shares on the retreat as interest rates advance

In this new environment, Zip has retreated from the UK and Singapore markets and is focusing on the US and Australia-New Zealand (ANZ).

The company is putting on a brave face, even with the Zip share price shedding 87% of its value over the past year.

Last month, Zip reported a 51% increase in FY22 total transaction volumes to $5.7 billion as customer numbers lifted 64% to 7.3 million.

Still aiming for growth

Management also added that customer arrears are improving as it stepped up its screening and risk management.

Further, Zip is reassuring investors that its takeover of Quadpay is paying off. It reported strong growth in that market.

Zip allows users to split the cost of purchases over four interest-free payments, much like its competitors.

The company has a medium-term target to grow revenue by 7% to 7.5% and increase cash earnings before tax, depreciation and amortisation by 1-2%.

Zip share price snapshot

The Zip share price isn’t the only one on the nose. Fellow BNPL company Block Inc CDI (ASX: SQ2) is also nursing losses of more than 40% in the past year.

In contrast, the All Ordinaries (ASX: XAO) has surrendered around 8% of its value over the period.

The post Look who just landed more than $2 million worth of Zip shares appeared first on The Motley Fool Australia.

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More reading

• Smashed! Why is the Block share price down 4% today?
• Why are ASX 200 tech shares being hit the hardest on Wednesday?
• Why is the Zip share price plummeting 7% on Wall Street woes
• Why are ASX 200 shares tumbling like dominos on Wednesday?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Brendon Lau has positions in Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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