Ceased Coverage on Zip Co

As foreshadowed in our note on April 2, 2020, we cease coverage on Zip Co. We periodically adjust our coverage as necessary based on stock outlook, client demand, and investor interest. The immediate earnings outlook for Zip is challenging. Zip faces earnings headwinds from likely lower consumer discretionary spending and higher customer defaults. The firm is also reliant on securitisation funding for growth and a tightening, or even shut-down of the securitisation market, which has occurred in the past, could either lead to higher finance costs or an inability to grow. We expect more regulatory scrutiny and competition in the buy now, pay later industry in the future, meaning its historically strong revenue growth may not persist.