Zip Co Ltd (ASX: ZIP) shares have started the year in the red, down 31% so far after some wild volatility.
After an enormous rally throughout 2024, shares in the buy now, pay later (BNPL) player have failed to retake their previous highs of $3.50 apiece from last November.
The stock closed at $2.04 apiece in Monday's session.
What's the verdict from here for Zip shares? Let's see what the experts have to say.
Zip shares underwater in 2025
It was a shaky start to the year for Zip shares when the stock sunk more than 25% in a single day following the company's Q4 2024 results.
Zip produced growth across the board, but as my colleague Bernd reported, the BNPL player's revenue margin slipped to about 8%. Investors didn't wait to send the stock lower.
Shares bottomed at $2.16 on February 6, before a snapback rally over the month saw shares recover slightly.
Fast forward to its half-year results presented at the end of February, and the company still put up solid growth numbers.
The headline figure was the 24% increase in Total Transaction Value (TTV) to $6.2 billion. This is a key measure of Zip's performance.
In the US, TTV surged by more than 40%, and the company booked growth in overall pre-tax profit of 117% – a record result.
But the H1 update wasn't enough for investors to lift the bid on Zip shares. After a short-lived gain, the stock is at it's lowest mark since August last year.
Zooming out, the BNPL industry has been in the spotlight since Australian government proposed new oversight for the BNPL industry last month.
The proposed regulations, brought in by the Assistant Treasurer and Minister for Financial Services, will come into effect later this year, and aim to maintain "robust protections for consumers and fostering innovation within the industry."
The proposal will provide "appropriate guardrails to protect Australians while also giving the BNPL industry room to grow responsibly."
No saying what this means for Zip shares over the long term.
Sentiment still bullish?
Despite the short-term pressure, there's still plenty of experts who are bullish on Zip shares, perhaps more so with their recent price weakness.
According to CommSec, the consensus analyst estimates rates Zip a buy, with 8 out of 9 brokers sitting on the bullish side of the fence.
No brokers recommend selling Zip at this point. Meanwhile, the consensus price target is $3.64 apiece, according to Tradingview, with targets as high and as low as $4.57and $3.00, respectively.
Fund manager Blackwattle used the dip in Zip shares to add to its position.
As we reported at the time, the fund is attracted to the BNPL company's projected 40% earnings growth.
Not to mention Zip's growth runway over in the US, another point Blackwattle mentioned.
Time will tell if these opinions are correct or not.
Foolish takeaway
Zip shares have started the year in the red after a volatile first few months. So what's the verdict?
Well, brokers are still bullish on aggregate, and those with skin in the game (eg Blackwattle) recently increased their stakes. But that's only one side of the coin. The stock is down 15% in the past week alone.
Taking a step back, the stock has held onto a 69% gain over the past 12 months.
The post Buy, hold, or sell: What's the verdict on Zip shares? appeared first on The Motley Fool Australia.
Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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