Why the Zip share price is plummeting 15% today

The Zip Co Ltd (ASX: Z1P) share price is plummeting today, down 11%. What's behind the sell-off, and is this dip a good buying opportunity for Zip shares?

| More on:
man bending over to look at red arrow crashing down through the ground

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Zip Co Ltd (ASX: Z1P) share price is plunging today, down 11.64% at the time of writing to $7.06 a share. Z1P shares opened at $7.26 this morning after closing at $8.01 yesterday and were down to $6.57 at one point, highlighting the swift and decisive nature of this move.

Zip shares have had a rollercoaster ride over the past fortnight. Exactly 2 weeks ago, Zip shares were asking $6.24. By 24 August, the Zip share price was up to $7.45 and by 26 August it was $9.65. After printing a new all-time high of $10.64 on Monday (representing a gain of more than 70% in under 14 days), the shares came crashing back to earth and have continued to fall ever since.

Why is the Zip share price crashing 15% today?

The selling of Zip shares has accelerated over yesterday and today – 2 days where the stock has shed more than 20% of its value. The catalyst behind this move is highly likely to be the announcement on Monday night (our time) that the American payments giant PayPal Holdings Inc. (NASDAQ: PYPL) is entering the buy now, pay later (BNPL) space that both Zip and arch-rival Afterpay Ltd (ASX: APT) are currently dominating.

PayPal is a payments company with a market capitalisation of approximately US$245 billion – no small fry. It's known for both its stellar growth in the online payments space over the past decade and for being one of Tesla Inc. (NASDAQ: TSLA)'s CEO Elon Musk's early business ventures.

PayPal released a statement on Monday outlining the launch of 'Pay in 4' to customers in the United States in the fourth quarter of 2020. This new product will allow customers to make a purchase and 'pay in 4' interest-free instalments. It will be embedded into PayPal's existing payments infrastructure, which means merchants won't be charged additional fees for its use.

This product is obviously a direct threat to Zip (and Afterpay) given PayPal's size and scale in the payments market. This partly explains, in my view, why the Zip share price is cratering today.

Froth and volatility

It's also worth noting that there was a lot of froth and volatility in the Zip share price, which is inevitable when you have a 70% move upwards over just 2 weeks. A share price movement like that is extremely vulnerable to a negative piece of news like we've witnessed coming out of PayPal.

With a lot of short-term traders likely sitting on massive profits, there would have undoubtedly been a lot of itchy fingers yesterday morning. This news was evidently more than enough to trigger some profit taking, which looks to be snowballing today.

Is Zip a buy today?

If you're bullish on Zip's long-term future and aren't fazed by PayPal's moves, then perhaps. But I'm certainly staying away from this frothy stock for now. There is clearly a lot of betting and trading going on with the Zip share price this week, and that's something that I want no part of. It might be worth waiting for a real dip on this one, rather than the dramatic steam-letting we are seeing today.

Should you invest $1,000 in Core Lithium Ltd right now?

Before you buy Core Lithium Ltd shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Core Lithium Ltd wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Happy woman working on a laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a pleasant end to the trading week for investors this Friday.

Read more »

Close-up of a business man's hand stacking gold coins into piles on a desktop.
Opinions

If I had a big cash pile like Warren Buffett, here's how I'd spend it in 2025

I'd put Buffett's billions to work straight away.

Read more »

Man pointing at a blue rising share price graph.
Technology Shares

Up 30% in a month, this ASX 200 tech share is 'a compelling opportunity': expert

Analysts from listed investment company WAM Capital say this ASX 200 tech stock is worth watching.

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
52-Week Highs

5 ASX 200 shares hitting multi-year highs after strongly rebounding from tariff turmoil

These stocks have hit new price milestones amid a day in the green for the ASX 200.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Share Market News

3 key takeaways from the 2025 Macquarie Conference

More than one hundred companies presented at the Macquarie Conference this year. Here’s what we learned.

Read more »

An executive in a suit smooths his hair and laughs as he looks at his laptop feeling surprised and delighted.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A happy investor sits at his desk in front of his laptop and does the mexican wave with his arms to celebrate the returns from his ASX dividend shares
Share Gainers

Why Chrysos, GQG Partners, Macquarie, and Webjet shares are storming higher today

These shares are ending the week on a positive note. But why?

Read more »

A young man sits at his desk working on his laptop with a big smile on his face.
Share Gainers

The top 3 ASX 200 trades since the Liberation Day dip

These companies are up at least 35% in just over a month.

Read more »