Zip Co shares rebound after record sell-off following US fraud incident

Zip Co Ltd shares rose more than 14% on Monday, recovering part of a record sell-off that occurred after the company disclosed a coordinated fraud attack in the United States. The incident, described as an “external fraud event,” involved fraudsters using legitimate credentials to open new accounts and run transactions without repayment, costing the company approximately A$10.1 million in bad debts and mitigation expenses.

Despite the fraud and a temporary dip in US transaction volumes during July and August, Zip reported strong underlying growth for the first quarter of fiscal 2027. Total transaction volume reached $4.6 billion, an 18% increase year-on-year, while total income rose 17% to $376 million. CEO Cynthia Scott noted that transactions per customer increased by 27% in the US and 14.2% in Australia.

Analysts from Macquarie and UBS have expressed bullish views on the stock, suggesting the recent price drop creates a buying opportunity. While UBS lowered earnings forecasts due to higher-than-expected bad debts and slower growth in Australia and New Zealand, the firm reiterated a “Buy” rating, expressing confidence in improving momentum for the second quarter.