Zip Co (ASX:Z1P) share price up after announcing new partnership

The Zip Co Ltd (ASX: Z1P) share price is up today after the Buy Now, Pay Later (BNPL) provider announced a new partnership with JB Hi-Fi Limited (ASX: JBH).

At the time of writing, the Zip share price has retreated slightly, trading at $7.37, up 0.41%. JB Hi-Fi is also up 1.12%, trading at $52.33.

For comparative purposes, the S&P/ASX 200 Index (ASX: XJO), is up 1.03% while BNPL competitor Afterpay Ltd is up 0.1%.

Let’s take a closer look at today’s announcement.

JB Hi-Fi stores to accept Zip payments

The Zip share price is responding well to today’s news. In a statement to the ASX, Zip Co announced it will enter into a partnership with JB Hi-Fi.

Both JB Hi-Fi branded stores and The Good Guy stores will accept Zip payments from customers. Payments can be made both online and in-store.

Zip, like most BNPL providers, offers consumers the option to pay for items over four instalments, interest-free. Consumers are only charged late fees if payments are not made on time. Merchants, however, are slugged with fees several times higher than standard debit or credit card fees. Merchants are prohibited from passing on the fees to customers – the RBA has discussed banning this practice.

Today’s news comes just a day after Afterpay launched its latest tool for in-store purchases – Afterpay Card.

The partnership will begin in April 2021.

Management Commentary

Zip co-founder and COO, Peter Gray, said the following about today’s announcement:

We are delighted to partner with the JB HI-FI Group. We look forward to providing customers with choice at checkout, empowering them to own the way they pay at JB HIFI and The Good Guys. This strategic partnership provides Zip customers with access to even more of Australia’s favourite brands, further delivering on Zip’s mission to be the first payment choice everywhere and every day

Half-year results

Zip Co

For the months ending 31 December 2020, Zip recorded a 141% increase in total transaction value to $2.32 billion on the prior corresponding period (pcp). Revenue increased by 130% to $160 million on the pcp. The Zip share price fell heavily on the results.

Zip recorded a massive $455.9 million loss for the period.

JB Hi-Fi

During the FY21 half-year, JB Hi-Fi’s net profits increased by 86.2% on the pcp to total $317.7 million. Revenue was up by 23.3% for JB Hi-Fi Australia stores ($3.36 billion), 9.1% for JB Hi-Fi New Zealand (NZ $144.9 million), and 9.1% for The Good Guys ($1.45 billion).

Zip share price snapshot

Over 12 months, the Zip share price has increased 369.09%. A very tide return on investment for traders.

However, since hitting its record high of $14.53 in February, the company’s share price has dropped a massive 49.21%.

Zip Co has a market capitalisation of $4.1 billion.

More reading

• ASX 200 jumps 1.35%: Zip inks deal with JB Hi-Fi, Suncorp’s flood update
• 4 ASX shares with director buys this month
• Airtasker and Zip were among the most traded ASX shares last week
• Are red-hot house prices good for ASX 200 shares?
• Treasury (ASX:TWE) and Afterpay (ASX:APT) share prices on watch

Marc Sidarous 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 owns shares of AFTERPAY T FPO. 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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