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Zip Co (ASX:ZIP) has put customer trust at the center of its story, launching its new “In You We Trust” brand platform alongside a national “You Trust Me?” campaign and fresh app and payment features.
See our latest analysis for Zip Co.
These customer focused launches come after a mixed stretch in the market, with Zip Co’s 1 day share price return of 3.98% contrasting with a 30 day share price return decline of 15.26% and a very large 3 year total shareholder return, suggesting momentum has cooled recently even though long term holders have still seen strong gains overall.
If this focus on customer trust has you thinking about other potential opportunities in financial services and beyond, it could be a good moment to broaden your search and check out 2 top founder-led companies.
With Zip Co trading at A$2.61, sitting on a small indicated intrinsic discount and a wide gap to the A$5.05 analyst target, you have to ask: is there mispricing here, or is the market already baking in future growth?
With Zip Co last closing at A$2.61 against a most followed fair value of A$5.05, the current price sits well below that narrative anchor, which is built on specific revenue, margin and earnings expectations discounted at 8.82%.
Scaling distribution through partnerships and embedded finance with major merchants and platforms (such as Google Pay, Stripe, and large retailers in key verticals) is decreasing customer acquisition costs and increasing take rates, which should drive further operating leverage and higher earnings.
Curious what revenue growth path, profit margin lift and earnings multiple are packed into that A$5.05 figure? The narrative leans on punchy top line expansion, fatter margins and a future valuation multiple that sits well above the sector. The exact mix of those three inputs is where the real story sits.
Result: Fair Value of A$5.05 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this upbeat narrative still faces pressure from tighter regulation and tough competition in BNPL and adjacent payment options, which could weigh on Zip Co’s growth and margins.
Find out about the key risks to this Zip Co narrative.
That A$5.05 fair value suggests upside, but the current P/E of 41.5x sits well above both the Australian and global consumer finance averages around 12x, and also above the 26.4x fair ratio our models point to. Is the market rewarding Zip Co, or just raising the risk if sentiment turns?
