Citi says Zip has addressed fraud issue, notes stronger transaction growth
ZIP•Citi said Zip had addressed a coordinated fraud issue that weighed on first-quarter performance and noted total transaction value growth accelerated to 41% year over year in September, from about 30% in July and August.
1. Transaction growth improves
Citi said Zip had addressed a coordinated fraud issue that weighed on first-quarter performance, with transaction volume growth accelerating in September and continuing into October. Total transaction value growth improved to 41% year over year in September from about 30% in July and August.
2. Fraud and outlook
Citi said tighter risk settings to combat fraud affected existing customer spending and new customer sign-ups. It attributed a A$10 million increase in bad debts to a coordinated fraud ring using valid customer credentials, rather than a deterioration in U.S. consumer health. Citi expects Zip’s guidance to be supported by stronger U.S. transaction growth, solid Australia and New Zealand performance and cost flexibility; it maintained its buy rating and A$3.30 target price.
