Current thoughts on Zip (ZIP) please

Hi Guys,

ZIP plunged over 35% on Thursday, the most since November 2014, after saying that earnings in the second half would be broadly in line with what it recorded in the six months ended Dec. 31. The firm reported cash earnings of $124.3 million in the first half, while also flagging bad debts rose to 1.73% of total transaction value during the half, up from 1.56% a year ago.

• The guidance was the issue for a company priced for growth.

While Zip’s 1H26 result was a modest miss to expectations, we view the ~35% share price decline as an overreaction. US momentum remains strong and the increase in net bad debts was expected as Zip leans back into customer acquisition, with losses still within the targeted 1.5–2.0% range. While ANZ is mature, and low growth, we remain comfortable with Zip’s US growth outlook given ongoing structural tailwinds, and expect net bad debts to improve over time as Pay-in-8 volumes mature. Pay-in-8 in the US, which accounts for 19% of US TTV, currently carries higher losses than Pay-in-4 due to its longer duration. However, the credit profile of Pay-in-8 users should improve over time as the company washes out the poorer quality customers using the product.

Even though earnings for the 2H are likely to be flat on the 1H overall, we’re continuing to expect strong US TTV growth north of 30% into 2H, then moderating to mid 20’s from there. This is driven by continued penetration of BNPL in the US and their focus on predominantly non-discretionary items which are more resilient through macro cycles. Zip is trading on ~15x fwd P/E for 30% EPS growth (CAGR) over the next three years.

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ZIP Co Ltd (ZIP)

LAST UPDATED 19/02/2026 11:23

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ZIP Co Ltd (ZIP)

LAST UPDATED 19/02/2026 11:23