Zip Co Ltd (ASX: ZIP) shares have been plenty volatile this past year.

After racing higher for most of 2024, shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock closed at $3.50 apiece on 12 November.

The share price bounced around from there before commencing a sharp fall at the end of January. That pressure followed the company's second quarter update. While Zip reported strong year-on-year earnings and revenue growth, investors look to have favoured their sell buttons after the revenue margin declined to 7.9% from 8.2%.

By 7 April, Zip shares had sunk all the way to $1.19.

And then things, once more, took a strong turn for the better.

In afternoon trade today, shares are up 6.4%, changing hands for $1.68 apiece. That sees the ASX 200 BNPL stock up an eye-watering 41.2% in just three holiday-shortened trading weeks.

So, is it too late to buy the stock now?

Can Zip shares keep surging in 2025?

The big turnaround in Zip shares these past three weeks is being driven by two key market releases.

First, on 8 April, the company announced its intention to undertake an on-market share buyback of up to $50 million.

"The buy-back program we have announced today is consistent with our capital management framework and focuses on maximising shareholder returns," Zip CEO Cynthia Scott said on the day.

"Zip will maintain a strong balance sheet following completion of the buy-back with ongoing flexibility to pursue future growth opportunities," Scott added.

Zip shares also got a big boost on 16 April, following the release of the company's third-quarter results.

Highlights from the three months to 31 March included a 219% year-on-year increase in cash earnings before tax, depreciation and amortisation (EBTDA) to $46 million.

Total transaction value (TTV) came in at $3.3 billion, up 36% on Q3 FY 2024, while total income of $279 million was up 27%.

And Scott sounded an optimistic note on the outlook, noting:

Following the strong third quarter we reconfirm our two-year targets provided at the start of FY25 and upgrade our earnings expectations to deliver cash EBTDA of at least $153.0 million in FY25.

Lacking a time machine…

Obviously, it would be great to jump back in time to 6 April and snap up Zip shares before they went meteoric this month.

And there were plenty of bullish analysts on hand to back that buy recommendation. On 4 April, consensus analyst forecasts on CommSec had eight strong buys and one moderate buy on Zip stock, with no hold or sell ratings.

As for what lies ahead, BNPL stocks like Zip have proven to be highly sensitive to interest rates. If interest rates in the company's core markets of the United States, Australia, and New Zealand come down in 2025, this would likely boost consumer spending on its platforms and lower its own financing costs.

US President Donald Trump's tariffs are also one to keep an eye on. If a global trade war can be averted and the US, Australia, and New Zealand can keep their economies growing, Zip shares stand to benefit.