The Zip Co Ltd (ASX: Z1P) share price has gone up after announcing a partnership with JB Hi-Fi Limited (ASX: JBH).
Why is the Zip share price rising?
The buy now, pay later business said it’s going to provide a fully integrated payments solution for both JB Hi-Fi and The Good Guys, providing customers with the ability to shop, both in-store and online, and pay with Zip’s interest free buy now, pay later payment solutions.
Zip said that the JB Hi-Fi Group operates two of Australia’s most trusted retail brands, and is one of Australia’s largest technology, entertainment and home entertainment retailers.
It’s expected that this partnership with will launched to the market in April 2021. So, very soon.
Management comments
The co-founder and chief operations officer of Zip, Peter Gray, said:
“We are delighted to partner with the JB Hi-Fi Group. We look forward to providing customers with choice at checkout, empowering them to own the way they pay at JB Hi-Fi and The Good Guys. This strategic partnership provides Zip customers with access to even more of Australia’s favourite brands, further delivering on Zip’s mission to be the first payment choice everywhere and every day.”
What to make of this announcement for the Zip share price?
Well the market clearly likes it, but the company didn’t label it as ‘price sensitive’, so individually so it’s not going to make a huge difference to Zip. Or at least, not at the start.
The Zip share price has been dropping in recent times. Since 16 February 2021, the Zip share price has fallen 46%.
Some investors might think this is a huge opportunity, or it may simply have fallen back to what was a fair price. The valuations of businesses like Zip and Afterpay Ltd may have gotten a bit ahead of themselves.
The hard thing to know is how profitable the industry and individual players can become in the future. It’s hard to know when you have huge financial entities like PayPal and Commonwealth Bank of Australia (ASX: CBA) getting involved. Whilst I prefer Zip to Afterpay, I like some ASX growth shares in the payments space even more.
