Zip Co (ASX:ZIP) shares closed 29.5% lower at A$1.46 on Friday 23 October 2026, the buy now, pay later company’s biggest one-day drop on record, according to IBTimes. The shares fell as much as 50.5% to A$1.025 during the day after Zip revealed a costly US fraud event and higher bad debts.
What Zip reported
According to Zip’s first-quarter update for the three months to 30 September:
| Metric | 1Q FY27 | Change |
|---|---|---|
| Total transaction value | A$4.6B | Up 18% |
| Revenue | A$373.4M | Up 17% |
| Cash EBTDA | A$65.0M | Up 3% |
| Adjusted cash EBTDA | A$75.1M | Up 20% |
| Group net bad debts | 1.97% of TTV | Up from 1.65% |
Growth was solid. The problems were fraud and bad debts.
The US fraud event
Zip said a group of coordinated individuals opened new US accounts using legitimate credentials and ran transactions that were never repaid. The event:
- Cost US$7.2 million (A$10.1 million) in cash operating expenses
- Slowed transaction growth and new customer sign-ups in July and August
- Has been reported to the authorities, and Zip has lodged an insurance claim
Zip said US transaction value grew 41% in US dollar terms in September, with momentum continuing into October.
CEO Cynthia Scott said “an external fraud event, and the measures we took to mitigate it, temporarily moderated TTV.”
Bad debts are rising
Group net bad debts rose to 1.97% of transaction value, up from 1.65% a year earlier. In the US, Zip’s biggest market, bad debts rose to 1.93% from 1.67% in the June quarter, near the top of its 1.5% to 2.0% target range.
RBC analyst Julian Mulcahy said results beat expectations on most measures, but loss rates were higher and the fraud would hit profit, according to Michael West Media.
Guidance kept
Despite the hit, Zip reconfirmed all of its FY27 guidance, including group cash EBTDA of A$340 million and US transaction growth of more than 30% in US dollars.
The insider angle
Market Index records show CEO Cynthia Scott converted securities into about 2.7 million shares in September, sold 36,274 shares on market at A$2.25, and moved about 2.67 million shares in an off-market transfer. Her on-market sale was small, and the shares now trade about 35% below that price.
Our Megaport insider trading analysis explains how to read these filings.
Share consolidation coming
Zip has proposed a five-for-one share consolidation, to be voted on at its 19 November AGM. Every five shares would become one, without changing the value of each holding.
What Zip investors should watch
- Bad debts in the December quarter
- Any fraud-related insurance recovery
- The 19 November AGM and consolidation vote
- Director trades in Appendix 3Y notices
Bottom line
Zip is still growing and kept its full-year guidance, but a US fraud event and rising bad debts sent the shares to their worst day on record. As with Mesoblast’s recent miss, the next quarter will be critical.
