It has been an uncharacteristically disappointing couple of weeks for the Zip Co Ltd (ASX: Z1P) share price. Since peaking at a record high of $7.88 on 13 July, the buy now pay later provider's shares have tumbled approximately 24% lower to $6.01.
Despite this decline, Zip Co shares remain very popular with investors. This is particularly the case with CommSec investors.
Data released by CommSec reveals that Zip Co has been the most traded ASX share on its platform over both of the last two weeks. In fact, two weeks ago Zip Co shares accounted for a staggering 8.1% of total trades made on the CommSec platform. And according to the data, 70% of these trades were executed by buyers.
Last week Zip Co remained the most traded ASX shares on the CommSec plafform, accounting for 3.2% of total trades. On this occasion, the buying and selling was a little more even.
Why are Zip Co shares so popular?
There has been a sharp uptick in new investors, or Robinhood investors, this year following the market crash. Robinhood is a US-based investment app which has become increasingly popular with millennial investors due to its free brokerage.
But rather than being focused on making long-term investments, many are taking advantage of the free brokerage to trade shares.
The most recent example of this is Kodak. The photography pioneer's shares rocketed over 500% at one point on Wednesday evening. According to CNBC, over the last 24 hours, more than 60,000 Robinhood users have added the stock to their portfolio. This makes Kodak the most popular stock on the trading app by some distance.
In Australia, Zip Co and its fellow buy now pay later peers Afterpay Ltd (ASX: APT), Openpay Group Ltd (ASX: OPY), and Sezzle Inc (ASX: SZL) have proven to be extremely popular with our own version of Robinhood investors.
So much so, two weeks ago when Zip Co accounted for 8.1% of total trades, all the top five traded shares on the CommSec platform were buy now pay later providers. Combined, they represented 21% of total trades for the week. This means 1 in 5 trades involved a buy now pay later share, which is staggering.
Is Zip Co a share to buy?
I think Zip Co, and particularly Afterpay, would be great buy and hold options. Given the positive tailwinds that the industry is benefiting from and the increasing popularity of the payment method with consumers and merchant, I believe both have enormous potential.
Though, given how popular they appear to be with traders, their shares do carry a lot of risk and are likely to be more volatile than others. As a result, you might want to restrict an investment to just a small part of your portfolio.
