The Zip Co Ltd (ASX: ZIP) share price has jumped 8% after announcing a share buyback.
Zip is a buy now, pay later business that helps customers fund purchases through instalments.
Zip share buyback
The buy now, pay later business said it intends to carry out an on-market share buyback of up to $50 million. The buyback is expected to start on or about 23 April 2025 for up to 12 months.
The company said its announcement reflects the strength of the Zip balance sheet, the continued delivery of operating cashflow and its outlook for future profitable growth.
Doing this is designed to “maximise shareholder returns, whilst preserving balance sheet strength and ensuring Zip maintains the ability to pursue strategic growth opportunities.”
How much it ends up buying will depend on the Zip share price and other opportunities to use the capital.
Zip said the price it pays will be no more than 5% above the average Zip share price over the five trading days prior to the purchase. Additionally, it won’t buy back more than 10% of its shares over the next 12 months.
It also announced it would bring forward the release of its FY25 third quarter update ASX announcement to 16 April 2025.
Management comments
Zip Group CEO and Managing Director, Cynthia Scott said:
We continue to execute on our strategic priorities with the Group generating strong operating cashflows and maintaining balance sheet strength. The Buy-Back program we have announced today is consistent with our capital management framework and focuses on maximising shareholder returns. Zip will maintain a strong balance sheet following completion of the Buy-Back with ongoing flexibility to pursue future growth opportunities.
Final thoughts on the Zip share price
I can see why investors are excited by this news – a share buyback can be very supportive for the share price if the company doing the buyback is a buying a sizeable amount of shares on the market each day.
Zip wouldn’t be the first share I’d buy after the volatility, but it looks interesting after sinking over 50% since 25 February 2025.
