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Zip (ASX:Z1P) share price goes nuts on eBay partnership

The Zip Co Ltd (ASX: Z1P) share price is going nuts, it’s up 11% after announcing a partnership with eBay Australia.

Zip’s shares had already soared this week after announcing an update from QuadPay which you can read about here.

Zip Business eBay partnership

Zip announced it has officially launched Zip Business today by partnering with eBay Australia.

The deal will give 40,000 small and medium Australian businesses access to working capital through the eBay marketplace.

Zip said the idea is to give merchants the freedom to purchase inventory, cover short term expenses like marketing campaigns and manage cashflow through this credit. The Spotcap brand will be brought into the Zip Business portfolio.

The buy now, pay later (BNPL) business said this partnership is the first of a number of integrated products Zip will roll out with the launch of Zip Business to support both small & medium businesses and its retail & channel partnerships.

Zip co-founder and chief operating officer Peter Gray said: “This comes at a time when Australia’s small businesses are confronting the extreme challenge of COVID-19, which has created enormous pressure on cashflow and ongoing business investment. A thriving small business community is critical to the health of the Australian economy and we are deeply committed to support the growth of these important businesses.”

New debt funding

Zip also announced that it has agreed a $100 million debt funding facility with a US business called Victory Park Capital Advisors (VPC) to fund the Zip Business receivables. The facility will give Zip the flexibility and capacity required to support Zip Business.

The two businesses already have a history of working together – in November 2015, Zip announced a $108 million asset-backed facility with VPC, which grew to $200 million. It was one of Zip’s earliest debt partners.

Summary

This, along with Zip’s other acquisitions, deals and partnerships has caused the Zip share price to soar above $8. The whole BNPL sector is growing strongly. Will it keep going higher and higher? Who knows. It’s exciting to watch it do so well, but it’s hard to put a fair price on Zip (or any of its competition). For that reason I’m more attracted to ASX growth shares like Pushpay Holdings Ltd (ASX: PPH) which are already profitable but still have big growth aspirations.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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