Australia’s Zip Co. announced on Wednesday that it has teamed up with eBay Inc. to use the e-commerce platform as a marketplace to offer small and medium-sized businesses access to flexible credit lines.
The partnership between eBay (EBAY) Australia and the buy-now-pay-later company is part of the latter’s launch of Zip Business. The service will offer Zip’s 40,000 Australian small and medium-sized businesses access to working capital via the eBay marketplace. Financial details of the deal weren’t disclosed.
Merchants will be able to purchase inventory, cover short-term expenses such as marketing campaigns, and manage their cashflows, via access to flexible lines of credit. Zip is a provider of a variety of integrated retail finance solutions to small, medium and enterprise businesses across industries and offers credit and digital payment services to consumers and merchants.
The partnership with eBay is the first of a series of integrated products and solutions Zip is planning to roll out as it launches Zip Business, supporting both SMBs and its retail and channel partnerships.
“Zip is excited to launch its Zip Business platform to create a suite of products for the small business community, a segment that has been underserved by the traditional lenders in recent years,” said Zip co-founder Peter Gray. “This comes at a time when Australia’s small businesses are confronting the extreme challenge of COVID-19, which has created enormous pressure on cashflow and ongoing business investment.”
Meanwhile, ebay shares have been on a phenomenal run rallying 61% this year as more people ordered online due to the stay-at-home orders in place to contain the coronavirus pandemic and businesses are shifting to online sales. (See EBAY stock analysis on TipRanks).
Five-star analyst Scott Devitt at Stifel Nicolaus recently raised the price target on the stock to $70 (21% upside potential) from $68, and reiterated a Buy rating.
“The current environment provides eBay an attractive opportunity to lean into marketing and technology investments to sustain momentum on the platform coming out of the pandemic," Devitt wrote in a note to investors.
The rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus shows 11 Buys versus 17 Holds. Given this year’s sharp stock gain, the $62.32 average price target now implies a more modest 7.4% upside potential over the next 12 months.