ZIP.AX Stock Today: 35% Slide on H1 Bad Debts, Margins — February 20

The zip asx selloff accelerated today, with shares of ZIP.AX dropping about 35% after its half‑year update. The market focused on a higher net bad‑debt ratio at 1.7% of TTV and softer revenue margins, offsetting record cash EBITDA growth and reiterated FY26 targets. A possible U.S. dual listing flagged by management also added uncertainty. We break down the zip share price action, the key risks for BNPL stocks, valuation signals, and the technical picture Australian investors should watch next.

ZIP.AX plunges on H1 credit losses and margin squeeze

The zip share price closed near A$1.85, down 34.4% or A$0.97. Intraday ranged between A$1.72 and A$2.28 against a 52‑week band of A$1.085 to A$4.93. Market cap sits near A$2.35 billion. Turnover surged, with 218.6 million shares traded versus a 15.8 million average, a sharp liquidity spike that often follows guidance resets. For zip asx, volume confirms conviction behind the move.

Investors looked past record cash EBITDA growth and reiterated FY26 guidance, zeroing in on a higher net bad‑debt ratio at 1.7% of TTV and softer revenue margins. These trends tighten unit economics and weigh on BNPL valuations. Commentary highlighted margin pressure and credit costs as central issues behind the 35% slide source and sector competition and bad debts as ongoing headwinds source.

What the numbers say on risk and valuation

Key balance‑sheet markers show elevated risk for zip asx. Debt to equity is 3.42, interest coverage 1.94, and the cash ratio 1.06. The current ratio is 1.36, suggesting near‑term liquidity is adequate but sensitive to funding costs. With higher bad debts and softer margins, sustaining positive cash generation remains the swing factor. Investors should also watch receivables growth versus TTV to gauge credit quality.

On today’s A$1.85, EPS near A$0.06 implies a PE about 30.8. Price to sales is 3.34 and price to book 5.14, leaving limited cushion if earnings or margins slip. Meyka system signals are mixed: a Company Rating of C+ with a Sell tilt alongside a Stock Grade of B+ with a Buy tilt. Short‑term forecast sits near A$1.97 monthly and A$1.62 quarterly, while a 1‑year model of ~A$4.45 is more optimistic. For zip earnings, execution is key.

Technical picture after the 35% gap-down

Post‑drop, momentum for zip asx is mixed. RSI is 51.8, MACD histogram is slightly positive at 0.02, and ADX at 20 signals a weak trend. CCI at 127.75 and Williams %R at -9.52 flag near‑term overbought after an initial bounce. ATR of 0.18 points to elevated intraday swings. These signals fit a volatile consolidation after a gap‑down.

For the zip share price, today’s low near A$1.72 is first support, then A$1.60 on a breakdown. Initial resistance sits around A$2.28, with the 50‑day at A$2.99 and 200‑day at A$3.30 capping rallies. Bollinger bands span ~A$2.30 to A$3.07; Keltner channels ~A$2.34 to A$3.08. Position sizes and tight stops matter in this tape.

Strategic watch items for FY26

A U.S. dual listing flagged by management could broaden the register and liquidity but may lift compliance costs and volatility. For zip asx, funding spreads, merchant pricing, and interchange dynamics remain vital. Any regulatory change on late fees, credit checks, or disclosures could reshape BNPL unit economics. Watch management commentary on pricing power and cost of capital.

Focus on the net bad‑debt ratio trend, revenue margins, and net transaction margin. Track cash EBITDA versus receivables growth, and whether losses normalise as cohorts season. Liquidity headroom, warehouse capacity, and interest coverage will shape resilience. For bnpl stocks, clarity on credit controls and stable take‑rates are the catalysts to rebuild confidence after zip earnings.

Final Thoughts

Today’s reaction shows how quickly sentiment can swing when credit costs and margins tighten. For zip asx, the net bad‑debt ratio at 1.7% of TTV and softer revenue margins outweighed cash EBITDA momentum and reiterated FY26 guidance. Valuation sits on a mid‑30s PE and a mid‑single‑digit P/S, which demands cleaner execution. Technically, support near A$1.72 and resistance around A$2.28 frame the near‑term range, with moving averages higher. Our take: keep a watchlist, define risk per trade, and wait for evidence that bad debts and revenue margins stabilise. For bnpl stocks, those two lines now drive direction more than any headline.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.