At time of writing, the share price of Zip Co Limited [ASX:Z1P] is up 11.67%, trading at $2.68 in what has been a stellar year for the stock:
The latest news out of the company is that it has completed an oversubscribed share purchase plan (SPP).
SPP closed with significant demand for Zip shares
Those on the Zip register were able to subscribe for up to $15,000 worth of new shares at a discounted price of $1.53.
Zip was aiming to raise a maximum of $5 million in addition to the $42.8 million it had raised through a placement and the $8.9 million it had raised from Westpac after it exercised its top-up rights.
This time around, the SPP applications exceeded $35.8 million, so the scale back policy is as follows.
The applicants will receive the lesser of:
– The number of shares equal to 15.2% of the number of shares validly applied for.
– The number of shares held by the applicant on the Record Date.
The total amount of new shares will be 3.2 million and refunds of subscription money due to the scale-back will be sent to shareholders within five days of 18 April.
Will the Zip share price continue to go up?
The Zip share price has now broken sharply above its 20-, 50- and 100-day moving averages, and it is possible a brief pull back could occur as investors cash in on what would so far be a nearly 185% return for the year.
It now also has a sizeable war chest available to expand its business.
Although it had a loss of $6.7 million in its half-year results released in February, it should be closing this gap quickly if its revenue continues to grow at the current pace — it grew its revenue by 114% last year.
To conclude, investors might have priced in a portion of its future growth, but profits appear to be fast approaching.
This could lead to future share price growth, albeit perhaps at a more subdued rate compared to its rapid take-off this year.
For Money Morning
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