Zip Co shares sink about 50% after flagging $7.1 million US fraud costs

what happened

According to TradingView, citing Bloomberg, shares of Australian payments company Zip Co dropped roughly 50% after it disclosed A$10.1 million ($7.1 million) in costs tied to a fraud incident in the United States. The decline is the steepest in the company's history.

Zip said a coordinated group opened unauthorised accounts using legitimate credentials and ran transactions that went unpaid. The company said it identified and contained the incident, but it temporarily weighed on transaction volume and new customer acquisition in July and August.

Earlier this week, Joe Heck stepped down as chief executive of Zip's US division, and Rory Herriman was named interim CEO. Zip also reported net credit losses of 1.97% of total transaction volume in the quarter ended September 30, up from 1.65% a year earlier, with the US at 1.93%.

why it matters

About 70% of Zip's revenue comes from the Americas, so problems in the US feed directly into the overall picture. The company linked the higher losses partly to seasonal factors and preventive measures, and investors will likely watch how these trends develop in coming quarters.

market impact

Zip Co and Australian fintech: US fraud losses pressure the company's shares and sentiment in the sector

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