This report is an updated version of the report published on 5 June 2025 at 1.48 PM AEST.

Zip Co Limited (ASX: ZIP)

 ZIP engages in the provision of digital retail finance and payments solutions to consumers, and small and medium sized merchants in Australia, New Zealand, Canada, and the United States.

Recommendation Rationale – SELL at AUD 2.300

• Financial Highlights: ZIP's revenue margin dipped to 8.6% in Q3FY25 from 9.2% in Q3FY24. Concurrently, Total Transaction Volume (TTV) decreased by 5.0% QoQ to AUD 3,261.4mn in Q3FY25, and transactions fell by 6.6% QoQ to AUD 22.8mn in Q3FY25.
• Trading Near the Resistance: ZIP stock has surpassed its R2 level recommended on 1 May 2025. Therefore, share price can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/EBITDA, Price/Book, Price/Earnings) are higher than median of the Finance Sector.
• Market Risk: Zip’s growth depends on access to capital markets and funding sources. Market volatility or credit tightening could limit its ability to raise funds at reasonable costs.

ZIP’s Daily Price Chart

Valuation Methodology: Price/Earnings Approach (FY June'26E) (Illustrative)

Stock might trade at a slight premium to its peers considering the revenue growth in 1HFY25, total transaction volume (TTV) expansion, growing active customer base, stable cash transaction margin, and expected EBITDA for FY25. For conducting the valuation, the following peers have been considered: Netwealth Group Ltd (ASX: NWL), Tyro Payments Ltd (ASX: TYR), EML Payments Ltd (ASX: EML), others have been considered.

Considering that the stock has surpassed its R2 level, share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 2.30 (as of 5 June 2025, at 12:50 PM AEST).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 5 June 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.