The Zip Co Ltd (ASX: ZIP) share price dropped in September, but by how much?
Zip shares fell 28% between market close on 31 August and 30 September.
Let's take a look at why September was another tough month for the Zip share price.
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Why did the Zip share price fall?
The Zip share price may have fallen in September, but it was not alone among the ASX Buy Now, Pay Later (BNPL) sector. Block Inc CDI (ASX: SQ2) shares descended more than 17% in September, while Sezzle Inc (ASX: SZL) slumped 28%.
The Zip share price has descended nearly 93% from a high of $12.35 on 19 February 2021.
Zip shares struggled in September amid rising interest rates, BNPL investor sentiment and broker downgrades.
Zip started the month on a sour note when it was booted out of the ASX 200 Index. The S&P Down Jones announced a quarterly rebalance on 2 September that applied from 19 September. The downgrade means Zip is no longer one of ASX's top 200 shares by market cap.
In mid-September, the Zip share price fell amid calls for tougher regulations on buy now pay later (BNPL) providers in the United States. The U.S. Consumer Financial Protection Bureau (CFPB) unveiled plans to oversight BNPL lenders in the same way as credit companies.
The bureau's director Rohit Chopra said:
We will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a Buy Now, Pay Later loan.
In late September, Seneca Financial Solutions senior investment advisor Arthur Garipoli recommended investors sell Zip shares. Commenting on Zip in a post on The Bull, Garipoli said "The outlook presents challenges in a tough economic environment".
On a positive note, earlier in the month Jarden analysts sought to dispel "myths" on Zip credit losses and cash burn. Analysts noted Zip's "tightening measures across the whole cycle to help contain its credit losses". On cash burn, analysts said:
The Rest of World (ROW) strategic review is underway with predictions the second half will see Zip neutralise ROW cash burn.
The Reserve Bank of Australia (RBA) is due to meet on interest rates today. Experts are widely tipping the RBA to lift rates by 50 basis points.
Zip share price recap
Zip shares have lost nearly 90% in the past year, while it has fallen nearly 85% in the year to date.
For perspective, the ASX 200 has shed more than 10% in the past year.
ZIP has a market capitalisation of nearly $461 million based on the current share price.
