zip
Just heard today that ZIP is quitting its NZ business to concentrate on USA and Australia. If it is not profitable in NZ I’m wondering the implications it has to its other markets.
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Answer
Hi Kenneth,
This was a question from last week that we missed, came though late. The announced orderly wind-down of its New Zealand operations, citing a strategic focus on its Australian and US businesses will have an immaterial financial impact, and from our perspective at least, we wouldn’t have thought this would see a negative read through for other markets. The NZ market doesn’t have the scale of either Australia or the US, with the US being where the growth for Zip will come from.
However, the shares have materially underperformed their peers since the announcement was made, as the chart below shows relative to Sezzle & Block. The easy answer is the global selloff in longer duration growth stocks, but with the others in the sector holding up better, that argument does really hold.
Overall, we don’t think the announcement about NZ should have been the catalyst for weakness, and we don’t think its a negative for their broader business, but for now, the markets not agreeing with this view. We remain positive on Zip for growth, underpinned by their US operations.
