CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

How to Buy, Sell and Short Zip Shares

We look at how investors and traders can buy, sell and short Zip – a leading player in Australia’s BNPL market.

How to buy or invest in Zip shares

You can invest in Zip (Z1P) in two ways: either through share trading or derivatives trading. Share trading means that you take direct ownership of Zip stock, meaning you could potentially profit if the share price increases in value or if the company, however unlikely at this stage, decides to pay a dividend.

By comparison to owning the shares outright, derivatives trading – such as CFD trading – allows you to speculate on the price movement of Zip shares without actually taking ownership of them. CFD trading may prove attractive to some investors for a number of reasons, including the flexibility to trade stocks long and short, the ease of which it allows one to hedge, as well as the ability to gain larger exposure to an asset through leverage.

Trading Zip shares

  1. Create or log in to your trading account and go to our trading platform
  2. Decide whether CFD trading is right for you
  3. Search for ‘Zip'
  4. Choose your position size
  5. Open your position and monitor your trade

By comparison, when trading derivatives – such as share CFDs – you deal at the real market price, so we don't attach our own spread. Instead, we take a small commission when you open the position, and again when you close it. In each instance, a minimum charge, as outlined below, applies:

Share category

Commission
per side

Minimum charge
(online)

Minimum charge
(phone)

Minimum retail margin requirement

Australia

0.10%

A$8

A$8

10.00%

How to sell and short Zip shares

After investing in Zip, you might want to sell your position if the share price starts to fall or if you find a better place to allocate your capital. Alternatively, you hold the opinion that Zip's share price will decline in value and as such you may want to short the stock through CFDs, potentially allowing you to generate a profit from falling prices.

This, as with opening a position with IG, can be done in just a few simple steps, described below:

Shorting Zip shares

  1. Create or log in to your trading account and go to our trading platform
  2. Search for ‘Zip
  3. Choose your position size
  4. Choose ‘sell’ in the deal ticket to go short and speculate on the price falling
  5. Confirm and monitor your short position

Zip share price: the basics

Zip trades on the ASX under the ticker Z1P and unlike BNPL rival Afterpay, which is classified as a Software & Services company, Zip is classified as a Diversified Financials company under the GICS Industry Group classifications. Zip is also an authorised credit provider.

With the boom in BNPL services across Australia and the globe, Zip has seen its share price hit new highs over the last year, climbing to a 52-week high of $14.53 per share at its peak in February, 2021. At the time of writing, Zip traded at $7.53 per share, implying a market capitalisation of over $4.16 billion. Off it's high, but still well up over the last 12-month period.

At current price levels, Zip currently stands as one of the most valuable BNPL/ installments payments companies on the ASX. Other Australian-listed BNPL companies include Afterpay: market capitalisation ~$29 billion; Sezzle: market capitalisation ~$764 million, Openpay: ~$199 million, and Humm: market capitalisation ~$480 million.

Zip key personnel: who manages the company?

Name

Role

Larry Diamond

Founder and CEO

Peter Gray

Co-founder and Director

John Batistich

Non Executive Director

Martin Brooke

Chief Financial Officer

Steven Tesoriero

Director of Global Brand

Scott Paton

Director, People & Culture

Matthew Abbott

Director, Corporate Affairs

Tommy Mermelshtayn

Chief Strategy Officer

What is Zip’s business model?

Zip – like others in the buy now pay later space – allows its users to make purchases and pay for them over a number of installments. Unlike a number of other providers however, which in many cases focus on a pay it in four approach, Zip offers its users greater levels of flexibility, instead emphasising the idea of 'repay your way'. Here Zip allows users to repay as little as $40 per month, across weekly, fortnightly or a monthly repayment scheme.

Another key difference between Zip and a number of BNPL providers comes from the amount of credit offered to its customers. For example, the company’s Zip Money product is targeted at customers who want to make smaller, discretionary purchases – with its account limit set under $1,000 dollars. By comparison, the company's Zip Money product is aimed at people want to make larger purchases, with an account limit over $1,000 dollars.

Finally and speaking to the diverse scope of the company’s product line up, Zip also provides unsecured business loans of up to $500,000, to applicable businesses – as part of its Zip Business offering.

As with other providers in the space, users can also choose to pay off their outstanding balance all at once. Should users maintain an outstanding balance at the close of each month, for both Zip Pay and Zip Money, the company charges its users a monthly account keeping fee of $6.

Like other players in the space, Zip makes its money by charging fees to merchants when purchases are made through its platform; and from its users, for example, when they have an outstanding balance at the end of each month or when they fail to make a repayment on time.

'Revenue is generated from merchant fees, affiliate fees, interchange, and service fees’ and late fees, Zip noted as part of its latest interim results.

Fundamental analysis: how to analyse the Zip share price

Like many growth stocks, Zip is difficult to analyse or value using traditional financial metrics. Indeed, although the company has experienced exceptional revenue and transaction volume growth in the last few years, the company remains loss making. Despite that, the market is incredibly optimistic about Zip’s future, with the stock trading at ~13.3x sales.

The following metrics have been taken from Zip’s latest set of interim results, for the period ending 31 December 2020.

Metric

Description

Current

Total Transaction Volume

The value of all the transactions processed in the Zip ecosystem.

$2,320 million

Total revenues

Total income produced by the company from its business activities.

$160.0 million

Loan book receivables

The total amount of money Zip’s customer’s owe the company.

$1.7 billion

Active customers

The number of customers in the Zip ecosystem.

5.7 million

Merchants

The number of merchants offering Zip’s services.

38.5 thousand.

Price to sales ratio

A metric often use to value fast growing, pre-earnings companies.

13.3x

Publication date : 2021-03-25T23:28:00+0000

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The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

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