Zip Co's Wild 2026: A 109% Rally, a 21% Reversal, and a US Growth Story in Between

Fund managers say Zip's US turnaround is real, even as macro sentiment has driven more of its share price than company news.

30 Sep 2026 · 4 min read

Zip Co has given fund managers one of the wildest rides on the ASX in 2026, rallying more than 100 percent over the June quarter on the back of a genuine US turnaround, only to hand back a large chunk of that gain in July on a month with essentially no company-specific news at all. Between a February bad-debt scare that triggered heavy short selling and a July sell-off blamed almost entirely on macro sentiment, the buy-now-pay-later provider's fundamentals have arguably mattered less to its share price than the market's mood.

From bad-debt scare to renaissance

DS Capital described a half-year result that marginally missed expectations due to elevated bad debts in Zip's US business, its primary growth driver, with the market initially skeptical of management's explanation that a rapid new product rollout was behind it. A subsequent trading update eased those concerns, showing better-than-expected credit performance and continued strong US transaction growth. Medallion Financial said it felt more confident holding the stock at current prices than back when it traded near $5 as a pure momentum name, noting the February bad debt uptick brought a pause and a wave of short selling that has since largely unwound. Smallco Investment Manager added a new position after the February sell-off, and Zip became one of its largest contributors for the June quarter, up 109 percent.

A US consumer story with real numbers behind it

The June quarter gave bulls plenty of evidence. Solaris Investment Management reported US total transaction volume growth accelerating to 43 percent year on year, with the company reaffirming FY26 guidance and lifting its cash EBITDA guidance by 4 percent, ahead of consensus. Endeavor Asset Management detailed cash EBITDA guidance of more than $260 million for FY26 and more than $300 million for FY27, with revenue roughly doubling over three years while costs rose only around 30 percent, and bad debts expected to stay below 1.75 percent in the fourth quarter. QVG Capital framed the setup as a rare combination worth watching closely.

We see a double whammy of both upside to earnings and upside to the multiple at which ZIP trades. Earnings beats and multiple expansion are a formula for shareholder nirvana.

— QVG Capital, Monthly Report, June 2026

July's violent reversal, no news required

Zip fell 21.3 percent in July, giving back most of June's 40.9 percent gain, and several managers were emphatic that nothing company-specific drove it. Ausbil Investment Management attributed the move to a flare-up in geopolitical tensions that lifted global interest rate expectations, later partly unwound, while Blackwattle Investment Partners pointed to broader risk-off sentiment in technology and AI-linked stocks compounded by renewed Iran conflict uncertainty. Endeavor Asset Management, for whom Zip remained the portfolio's largest position, trimmed the holding twice during the month purely to manage its size after the run, while Lennox Capital Partners stayed a comfortable holder, noting supportive offshore reads on the US consumer and management's own expectation that net bad debts would keep declining.

Wilson Asset Management doubles down on a cheap re-rating case

Wilson Asset Management used the pullback to build conviction rather than retreat. It pointed to robust US bank results as evidence of a healthy US consumer, said management has balanced growth and credit discipline well enough to leave upside risk to FY27 consensus forecasts, and highlighted an active buyback against a strong balance sheet. The fund also noted Zip's share price has materially lagged US buy-now-pay-later peers that have rallied hard in recent weeks, leaving the stock, in its view, very cheap.

The share price has materially underperformed key US peers, which have rallied strongly in recent weeks, and the stock remains very cheap at around 9x EV/Cash EBITDA versus history.

— Wilson Asset Management, Article, July 2026

Wilson separately flagged Zip as one of several consumer discretionary names, alongside Eagers Automotive, Lovisa and Nick Scali, that it expects to benefit once domestic interest rates begin falling in 2027, arguing near-term conditions remain tough for Australian consumers but that positioning is close to washed out ahead of that pivot. With bad debts guided to stay below 1.75 percent, US transaction volume growth still running above 40 percent, and cash EBITDA guidance pointing toward $300 million-plus in FY27, fund managers say the next few quarters of credit performance, rather than any single headline, will decide whether July's sell-off was a buying opportunity or a warning sign.