When will this end? Zip’s stock price falls again on Tuesday

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The Zip Co Ltd (ASX: ZIP) stock price is slipping.


Shareholder confidence is certainly being tested, with bearish buyers taking a dip as Zip’s share price is down 9.8% in the early afternoon.

Zip shares closed yesterday at 77 cents each and are currently trading at 69 cents.

What’s going on with Zip’s stock price?

Provider Buy Now, Pay Later (BNPL) has been under sustained selling pressure since hitting all-time highs of $12.35 on February 19 last year.

Since that milestone, Zip’s stock price has crashed 94.1%. It is also down 90% over the past year.

Buyers of the dip are not feeling the joy, with Zip shares now posting six straight days of losses. Barring a miraculous turnaround in afternoon trading, the company will end the day at its ninth multi-year low in the past month alone.

In fact, you have to go back to December 2017 to find Zip shares at a lower price than today.

But they are not the only struggling BNPL company.

Why are BNPL shares selling?

The broader BNPL sector has come under intense selling pressure over the past 12 months.

Sezzle Inc. (ASX:SZL), for example, shares fell 95% during this period, while the industry giant Block Inc. (ASX:SQ2) – owner of Afterpay – is down 36% year over year.

Companies have all faced strong headwinds from rapidly rising inflation and the resulting rise in interest rates.

Many, including Zip, also saw their bad debts increase. Some analysts say BNPL companies have not done enough to ensure customers who take out small installment loans for purchases will be able to make those repayments.

And news about this global tech giant Apple Inc. (NASDAQ: AAPL) is moving forward with its BNPL offering, Apple Pay Later, which appears to face additional headwinds today. Apple said its offer was interest-free and free of late fees. This will work for all merchants who already accept Apple Pay.

With the Reserve Bank of Australia (RBA) announcing that it will most likely increase the official exchange rate today, you can understand why Zip’s share price is once again deep in the red.

Equities should remain under pressure until central banks begin to ease the current cycle of monetary tightening.

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