Why did the Zip (ASX:Z1P) share price zoom 8% higher today?

The Zip Co Ltd (ASX: Z1P) share price ‘zipped’ higher today despite no news having been released by the company.

But whatever the reason, its surge has likely eased the minds of anxious investors. Before today, the company’s stock had hit a new 52-week low every day for 4 trading days.

Yesterday – which saw the Zip share price tumbling 9.7% – brought the stock to an intraday low of $2.11. That’s the lowest it’s been since April 2020.

Fortunately, the buy now, pay later (BNPL) provider’s stock rebounded today. As of Wednesday’s close, the Zip share price is $2.32, 8.41% higher than it was at the end of Tuesday’s session.

It wasn’t the only one in the green today. The S&P/ASX All Technology Index (ASX: XTX) and S&P/ASX 200 Info Tech Index (ASX: XIJ) both ended the session 2.1% higher.

For context, the S&P/ASX 200 Index (ASX: XJO) gained 0.5%.

Let’s take a look at what might be going on with the driven the BNPL giant’s stock lately.

Zip share price soars ahead of earnings release

The Zip share price rebounded on Wednesday as the company prepared to release its earnings for the first half of financial year 2022.

They will drop sometime tomorrow. Luckily, or unluckily, the market has already had a chance to digest some of what its results will contain.

On Monday, Zip dropped a ‘preview’ of its earnings. Within the release, it reported that it expects the first half to have brought $302.2 million of revenue – representing an 89% increase on that of the prior comparable period and a new record.

Of course, that revenue was brought about by surging transaction numbers and transaction volumes – up 147% and 93% respectively.

However, Zip said its bad debts have increased to 2.6% of transaction volumes whiles its earnings before tax, depreciation, and amortisation is expected to come to a $108.1 million loss.

Additionally, the company announced it’s still in discussions to acquire ASX-listed rival Sezzle Inc (ASX: SZL).

The Sezzle share price also took off today, gaining 8%. Meanwhile, the Block Inc CDI (ASX: SQ2) share price gained 4%.

The potential it could acquire Sezzle was confirmed by Zip late last month. News that the talks are still ongoing likely bolstered investors’ hopes that things between the two are progressing well.

There have been rumours circulating around whether Zip would have to undergo a capital raise to afford the acquisition.

Though, such talks might be premature as the companies still haven’t confirmed whether they’ll go forward with the acquisition.

All in all, this week has been a particularly dramatic one for the Zip share price.

No doubt, all eyes will be on it once more tomorrow as the market awaits the release of the company’s half year earnings.

The post Why did the Zip (ASX:Z1P) share price zoom 8% higher today? appeared first on The Motley Fool Australia.

More reading

• ASX 200 tech shares take a hammering as Ukraine fears escalate
• These are the 10 most shorted ASX shares
• Opportunity? 5 ASX 200 shares that traded at 52-week lows today
• Why Nanosonics, Superloop, Uniti, and Zip shares are tumbling today
• Own Zip (ASX:Z1P) shares? Rumours are circulating the company may be set for a capital raise

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/QXZ3hd9