The Zip Co Ltd (ASX: ZIP) share price is on fire today.

That will come as welcome news to stockholders who watched shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock close down 7.4% on Monday at $1.19.

In morning trade on Tuesday, shares are swapping hands for $1.43 apiece, up 20.2%.

For some context, the ASX 200 is up 0.9% at this same time.

This strong performance follows news that Zip is launching a major share buyback.

Here's what we know.

ASX 200 BNPL stock buying back shares

The Zip share price is surging after the company announced this morning that it intends to undertake an on-market share buyback of up to $50 million.

Management expects to commence the buyback around 23 April, and it will run for up to 12 months.

The company said its decision to launch a buyback reflects the strength of its balance sheet, Zip's continued delivery of operating cash flows, and a promising outlook for ongoing profitable growth.

I also suspect that the significant fall the Zip share price in 2025 may be presenting an opportune time for buying back stock at a perceived long-term bargain.

The actual number of shares that will be repurchased under the program will depend on a range of factors. Those include:

• Changing market conditions
• Zip's prevailing share price over the buyback period
• Other opportunities that may emerge to utilise capital within the business as they emerge

 Zip stressed that it reserved the right to vary, suspend, or terminate the buyback program at any time.

Commenting on the $50 million buyback, Zip CEO Cynthia Scott said:

We continue to execute on our strategic priorities with the group generating strong operating cashflows and maintaining balance sheet strength.

The buy-back program we have announced today is consistent with our capital management framework and focuses on maximising shareholder returns. Zip will maintain a strong balance sheet following completion of the buy-back with ongoing flexibility to pursue future growth opportunities.

What's been happening with the Zip share price?

As mentioned up top, 2025 has been a tough year for the Zip share price.

That follows on a stellar run, which saw Zip stock soar more than 500% from December 2023 through November 2024.

That period came amid investor optimism over the global economic growth outlook and falling interest rates.

With lower rates and a strong economy, people are more likely to spend big on BNPL platforms like Zip.

But with the growth picture changing amid growing geopolitical uncertainty and interest rates in the US potentially on hold now, the Zip share price has come under heavy selling pressure this year.

With today's huge intraday boost factored in, shares remain down 52% year to date.