Zip Co stock trades at 1.18 euros as US fraud risk stays in focus

Published on 11/03/2026 at 20:49 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWS

Zip reaffirmed its fiscal 2027 cash EBTDA target after a US fraud event. Credit losses and funding costs remain key risks for investors.

Growth Holds Despite Fraud Pressure

Zip reaffirmed its fiscal 2027 cash EBTDA target after a US fraud event increased costs.
US bad debts reached the upper end of the company target range, keeping credit quality in focus.
Morningstar expects transaction growth to recover while warning that fraud, funding costs and regulation remain risks.

Zip Co, AU0000218307, Illustration mit AI erstellt.

Zip Co reaffirmed its fiscal 2027 outlook after an external fraud event in the United States raised costs and pushed bad debts higher. Morningstar reported the assessment on Friday, October 30, 2026, while maintaining a positive view on the underlying growth trend.

Morningstar said Zip kept its fiscal 2027 cash EBTDA target at AUD 340 million. First-quarter cash EBTDA rose 3% to AUD 65 million, while the result would have been nearly 20% higher without AUD 10 million of fraud costs.

US Growth Meets Credit Pressure

The fraud involved coordinated individuals who used legitimate credentials to open accounts and complete transactions that were not repaid. Zip tightened controls, which slowed US transaction volumes and customer additions in July and August.

US bad debts reached 1.93% of transaction value, the upper end of Zip's 1.5% to 2.0% target range. Morningstar said the company expects the ratio to decline in the second quarter, but identified credit quality and funding costs as risks for the investment case.

US transaction volume growth recovered to 41% in September and continued into October, according to Morningstar. The analyst said the response to the fraud supported its view that the business model remained resilient, while noting that fraud risk was now on investors' radar.

Morningstar maintains a AUD 3.50 fair value estimate and describes Zip shares as materially undervalued. The assessment is an analyst view rather than company guidance, and the outlook remains sensitive to bad debts, regulation and funding conditions.

Zip Co stock traded at 1.18 euros on Lang & Schwarz at 8:44 p.m. CET on Tuesday, November 3, 2026.

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