$Zip Co Ltd (ZIP.AU)$ shares rose 2.31% on Friday, with trading volume expanding to A$31.83 million within the first three hours of trading. ZIP has surged over 16% in the past week and has accumulated a 323% increase year-to-date.

ZIP technical analysis chart:

Technical Analysis:

• Support: A$2.55

• Resistance: A$2.93

• In the upward channel, buying strength is robust, and the stock price is within an ascending trend. There is a significant amount of profit-taking volume, so it is essential to be aware of the risk of selling pressure. ZIP rose along the upward channel year-to-date, with the stock price frequently touching around A$2.93, creating a certain level of resistance to the upside. Additionally, there are trapped positions around A$2.93, which could lead to selling pressure. Going forward, it is crucial to monitor whether the support at the lower end of the upward channel, near A$2.55, holds firm and whether the resistance near A$2.93 can be effectively breached.

Market News :

• ZIP announced its FY24 financial results on August 27. According to financial report, ZIP's revenue increased 28.2% YoY to A$868 million and total transaction volume increased 14% to reach A$10.1 billion in FY24, driven by continued optimisation across product and underwriting, deepening customer engagement. Also, it achieved an all-time high cash EBITDA of A$77.2 million, marking a substantial 420% year-over-year increase. This surge is attributed to robust growth in high-margin channels, including the app and physical card offerings. Additionally, the improvement in net transaction margins (NTMs) and enhanced operating leverage have contributed to this success. The number of merchants increased 9.6% YoY to 79.3k.

• The FY24 financial results look good, but the stock price fell by over 7% on the day due to high market expectation. However, the stock price has begun to rebound in the past two weeks, benefiting from the company's business logic, and there seems to be still large room for improvement in business penetration rates.

• ZIP was reported to join the S&P/ASX 200, with the changes taking effect from the start of trading on July 22, 2024.

Overall Analysis:

Fundamentally, focus on the company's performance and operational status, as well as the progress of integration negotiations with Apple. Technically, it is necessary to monitor whether the stock price continues to stay within the upward channel, whether the support at the bottom of the channel remains valid, and whether the resistance level can be effectively broken through.

In this scenario, investors should adopt a cautious strategy, setting stop-loss points to manage risk and maintaining ongoing vigilance regarding company developments and market conditions.

Source: ZIP