Zip Co Shares Surge Nearly 9% as Buy Now Pay Later Lender Extends Rally on US Growth and Buyback Push

SYDNEY — Shares of Zip Co Ltd climbed 8.74% on Wednesday to close at $2.925, extending a sustained rally for the buy-now-pay-later provider that has been fueled in recent months by accelerating growth in its U.S. business, an expanded share buyback program and an upgraded full-year profit outlook.

The gain adds to a string of strong sessions for Zip this year as the Sydney-based fintech company has worked to demonstrate that its U.S. expansion, long viewed by investors as the key swing factor for the stock, can deliver profitable growth at scale in a market dominated by larger rivals including Affirm and Block's Afterpay.

Record Results Fuel Confidence

Much of the recent momentum traces back to Zip's third-quarter results, released in April, which showed record cash earnings before tax, depreciation and amortization of $65.1 million for the three months ended March 31, a 41.5% increase from the prior corresponding period. Operating margin expanded sharply to 19.4% from 16.5% a year earlier, a shift the company pointed to as evidence of improving unit economics as its business scales.

Total transaction volume reached $4.0 billion for the quarter, up 22.4% year over year, while total income rose 20.2% to $335.2 million. The standout performer was the U.S. business, where transaction volume surged more than 40% in U.S. dollar terms, with active customers growing 9% to add 375,000 new accounts and merchants on the platform rising nearly 18%.

Following the results, Zip lifted its full-year guidance for group cash earnings to at least $260 million for fiscal 2026, an upgrade the company described as one of the more bullish guidance revisions among Australian-listed financial technology companies so far this year. The results triggered a sharp rally in April, with shares surging as much as 24% intraday before closing up around 13% to 14% on exceptionally high trading volume.

Capital Returns and New Partnerships

Alongside its operational growth, Zip has continued to lean into capital management initiatives that have supported investor sentiment. The company expanded its on-market share buyback program to $100 million, part of what it has described as a balanced approach to capital allocation aimed at optimizing shareholder returns while continuing to invest in growth. Zip has also submitted a confidential draft registration for a potential U.S. Nasdaq listing, a move that could broaden its investor base and provide additional currency for future expansion.

On the product side, Zip has continued expanding its offerings and merchant partnerships in the U.S. in recent weeks. The company said it would support Stripe's Shared Payment Tokens, a system designed to let artificial intelligence shopping agents complete purchases on a customer's behalf without exposing sensitive payment details, positioning Zip to participate in what payments companies broadly expect to be a growing category of AI-assisted online commerce. The company has also expanded its "Pay-in-Z" product suite, including the launch of a shorter-term Pay-in-2 option designed to give customers greater flexibility for everyday purchases.

A History of Volatility

Zip's share price has not moved in a straight line this year. In February, shares plunged more than 30% in early trade even as the company reported a 334.5% rise in first-half statutory profit to $66.3 million, with investors reacting instead to margin concerns despite the underlying earnings beat analyst expectations at the time. That volatility underscores the degree to which Zip's stock remains sensitive to shifting sentiment around credit quality and growth sustainability in the buy-now-pay-later sector, even as the company's headline growth metrics have generally trended positively through the year.

Bad debt performance has remained a key metric watched by investors given the inherent credit risk in Zip's lending model. The company has maintained what it describes as a stable bad debt percentage even as transaction volumes have grown rapidly, a dynamic executives have pointed to as evidence that growth is being achieved without a corresponding deterioration in credit quality.

Regulatory Backdrop

Zip and its buy-now-pay-later peers continue to operate against a backdrop of increased regulatory attention in both Australia and the U.S., where policymakers have debated the appropriate level of consumer credit protections for products that sit outside traditional lending frameworks. The company has said it remains focused on responsible lending practices as it scales, though the regulatory environment remains a factor analysts continue to monitor as a potential source of future volatility for the stock.

With the U.S. now representing the majority of Zip's group transaction volume, according to recent company disclosures, the trajectory of American consumer spending and credit performance is likely to remain the central driver of investor sentiment toward the stock in the months ahead. Zip's next full quarterly update is expected to provide further detail on whether the momentum seen through the first half of 2026 has continued, along with any additional color on the company's Nasdaq listing plans and the pace of its expanded buyback program.