Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
Zip Co Shares Plunge 29% After US Fraud Event and Higher Bad Debts
Highlights
Introduction
Zip Co (ASX: ZIP) shares plunged on Friday after the buy now, pay later provider disclosed that its US business had been hit by external fraud. The stock was trading at AU$1.46, down 29.47% from Thursday's close of AU$2.07.
It opened about 49% lower and touched a fresh 52-week low of AU$1.025. About 63 million shares had changed hands, around 4.3 times the 20-day average.
What the Quarterly Update Showed
For the three months to 30 September 2026, total transaction volume (TTV) rose 18.0% on the prior corresponding period to $4.6b. Revenue rose 17.2% to $373.4m, and transactions lifted 21.8% to 31.6m.
Profit growth was much slower. Cash EBTDA edged up 3.4% to $65.0m, or $75.1m (up 19.5%) once fraud costs are stripped out.
Credit quality also weakened. Net bad debts climbed to 1.97% of TTV from 1.65% a year earlier. The cash net transaction margin eased to 3.8% from 4.0%.
Inside the US Fraud Event
Zip said a coordinated group used legitimate credentials to open new US accounts, then ran up transactions that were never repaid. Zip said the problem has since been found and brought under control.
Zip booked the loss of US$7.2m, or AU$10.1m, within cash operating costs. The tighter controls it put in place also slowed US spending and new sign-ups in July and August.
Zip has reported the matter to authorities and made an insurance claim. It said US TTV rose 41% in US dollar terms in September, and that strength carried into October.
US Versus Australia
US TTV rose 34.1% to US$2.57b and US revenue lifted 32.0% to US$183.7m, both in US dollar terms. US net bad debts came in at 1.93% of TTV.
Zip expects that ratio to ease in the December quarter while staying in the top half of its 1.5–2.0% target range.
Australia was steadier. Local revenue grew 8.3% to $111.5m, while TTV rose 3.6% to $952.4m. Arrears improved to 2.35% from 2.53% a year earlier, and receivables grew 11.8% to $2.33b.
Guidance Held
Zip reconfirmed all of its FY27 guidance, subject to market conditions. It still targets $340m of Group cash EBTDA, a 26% rise on FY26.
It also still expects US TTV growth above 30% in US dollar terms and an operating margin of 20–22%.
Share Price Movement and Sector Context
The wider market eased. The S&P/ASX 200 was down 0.22% at 8,773.8.
Fellow payments player Block Inc (ASX: XYZ) was trading at AU$112.08, up 1.19%. In US trade overnight, Block closed 1.04% higher at US$79.02, while US buy now, pay later peer Affirm Holdings closed 1.51% lower at US$72.40.
What Investors Should Watch
Conclusion
Zip's US growth stayed strong, but the fraud event and higher bad debts dented profit. Revenue still rose 17.2%, and Zip reconfirmed all of its FY27 guidance. The December quarter will show whether US losses ease as the company expects.
Note- All data presented is based on information available at the time of writing.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance. Disclosure: The information mentioned above has been sourced from the company reports and a third-party database, i.e. Koyfin. Investors are advised to use strict stop-loss to protect their investments in case of any unfavorable/uncertain market events. Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au