Zip Co stock: U.S. growth meets fraud and bad-debt risks

Published on 11/13/2026 at 20:29 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWS

Zip Co stock benefits from strong U.S. growth, but a 10.1 million fraud hit and higher bad debts raise execution risks. Analysts still see recovery potential.

Growth, credit risk and valuation

Zip's US business remains the main growth engine, while management guides to higher fiscal 2027 revenue and US transaction volume.
An external US fraud event cost the company 10.1 million and pushed group net bad debts higher.
The analysis sees recovery potential, but expects the path to remain volatile as Zip manages credit quality and market concentration.

Zip Co, AU0000218307, Illustration mit AI erstellt.

An analysis published by The Motley Fool Australia on Friday, November 13, 2026, presents a constructive long-term case for Zip Co while highlighting credit losses, fraud exposure and dependence on the U.S. market. The analysis concludes that a recovery is possible, but likely to be volatile.

U.S. growth drives the bull case

Zip's first-quarter fiscal 2027 result showed total transaction volume rising 18% from the previous quarter. U.S. transaction volume increased 24%, while U.S. revenue rose 22%, according to the analysis. Management is guiding to a 32% year-on-year increase in fiscal 2027 revenue and a 51% increase in U.S. transaction volume.

The U.S. business accounts for most of Zip's growth, making continued customer demand and execution in that market central to the investment case. The article also points to a modest forward valuation relative to expected earnings growth.

Fraud and credit quality remain risks

The bear case centres on an external U.S. fraud event in which accounts were opened with legitimate credentials and transactions later went unpaid. The incident cost Zip 10.1 million and temporarily slowed transaction and customer growth as the company introduced containment measures.

Group net bad debts rose to 1.97% of transaction volume from 1.65% a year earlier, while U.S. bad debts reached 1.93%. Those levels are close to the upper end of management's 1.5% to 2% target range, leaving credit performance and transaction margins important indicators for fiscal 2027.

Analysts see recovery potential

The Motley Fool analysis says all 13 brokers tracked by TradingView had a strong-buy rating and cites an average 12-month target of AUD 3.67. UBS has also identified structural growth tailwinds in buy now, pay later, while noting that Zip's forward valuation is attractive for a business with high-teens earnings-per-share growth potential.

Zip Co stock traded at 1.25 euros on Lang & Schwarz at 20:21 CET on Friday, November 13, 2026.