It hasn't been a great week so far for the Zip (ASX:Z1P) share price

Shares in the buy now, pay later group are falling lower this week

| More on:
illustration of laptop with down arrow and the word zip representing zip share price going down.

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 has been under pressure this week. Shares in the buy now, pay later (BNPL) leader are down 2.4% from Monday's opening price of $7.04 per share.

Here's what's affecting the Aussie payments company's value in recent days.

It's been a tough week for the Zip share price

Whenever an ASX share slides lower, it's always worth checking for any new announcements to contextualise the move. Unfortunately for curious investors, the last announcement from Zip was the company's full-year results release last Wednesday.

Zip reported a 293% surge in transaction numbers to 41.3 million in FY21. Total transaction value (TTV) jumped 176% to $5.8 billion as customer numbers jumped 248% to 7.3 million.

Those all look like solid growth numbers on the surface. However, investors didn't appear thrilled with the latest update with the Zip share price slipping following the release of the results.

That came after Zip noted a 30 basis point (bps) decline in cash transaction margin to 3.5%. Zip's marketing costs also surged 650% during the year as the company chases more market share in the growing sector.

The Zip share price has been sliding lower since last Wednesday's result. The valuation slide comes as shares in rival Afterpay Ltd (ASX: APT) have climbed 2.6% higher in the last 5 days.

There's also been increasing competition in the BNPL landscape. In a space that was ruled by Zip and Afterpay, new entrants such as PayPal Holdings Inc (NASDAQ: PYPL) and Commonwealth Bank of Australia (ASX: CBA) are now snapping at Zip's heels.

Foolish takeaway

The Zip share price has been under pressure in recent days in what appears to be a hangover from the BNPL group's FY21 results.

It's not all doom and gloom, however, with shares in the ASX company still up 22.9% year to date.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, PayPal Holdings, and ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Fallers

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why Evolution Mining, G8 Education, Lottery Corp, and Lynas shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

Two men in hard hats and high visibility jackets look together at a laptop screen at a mine site.
Gold

Down 50% in a year, time to pounce on this beaten-down ASX 200 gold stock?

A leading expert offers his verdict on this beaten-down ASX 200 gold miner.

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why CBA, G8 Education, JB Hi-Fi, and Vault Minerals shares are falling today

These shares are falling on Thursday. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

These were the worst ASX 200 shares to buy in June

These shares took a tumble last month. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Domino's, Helia, Qantas, and Zip shares are sinking today

These shares are having a tough time on hump day. But why?

Read more »

A sad man looks at his computer screen as he holds a slice of pizza in his hand with an open pizza box in front of him on his desk.
Share Fallers

Why did the Domino's share price just crash 17%?

ASX investors just sent Domino’s shares tumbling more than 17% today. But why?

Read more »

Red arrow going down with share prices in red symbolising a falling share price
Share Fallers

These 5 ASX All Ords shares were the biggest fallers of FY25

These are the ASX All Ords stocks you didn't want to own in FY25...

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why CBA, HMC Capital, Mineral Resources, and NIB shares are falling today

These shares are falling on Tuesday. But why?

Read more »