Investors of the ASX buy now, pay later (BNPL) share Zip Co Ltd (ASX: ZIP) would probably be pleased with the performance of the Zip share price so far this Tuesday. At present, Zip shares have enjoyed an encouraging 3.66% bump in today's session, putting the company at 42 cents per share.
But zooming out, the picture only gets bleaker. For one, Zip shares are down 18.3% over the past 12 months, as well as down 24% year to date. But Zip shares have also lost around 50% of their value since the spike we saw back in January. Back then, Zip shares spiked to above 80 cents each after a positive update from its fellow BNPL share Sezzle Inc (ASX: SZL).
But sadly, it has only been downhill from there. We won't even mention Zip's long-forgotten glory days of 2021. Save for noting that the Zip share price has cratered close to 97% from those levels above $12 a share that investors were enjoying back then:
A 97% fall in value is obviously a pretty tough situation to bounce back from. So that begs the question: is there any hope for the Zip share price today?
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Could the Zip share price have a miraculous rebound?
That's a tricky question to answer. Now that the BNPL hype of yesteryear has decidedly faded from the ASX, it's worth pointing out that Zip is right in the middle of a competitive sandwich that no company wants to find itself in.
Competing in the payments space is a tough gig. On one level, you have other BNPL providers, such as Block Inc (ASX: SQ2)'s Afterpay to wrestle over customers with. But then there are US payments giants like Visa, Mastercard, Paypal and American Express to consider.
Many of these companies have launched BNPL services of their own in recent years. On top of that, you also have competitive pressures from the likes of Apple and Alphabet's Google, with their own payment platforms growing in popularity.
So Zip is a very small fish in a very large pond filled with far bigger fish.
As we covered earlier this month, Zip does have some positive metrics going for it. Its most recent quarterly update did show some solid revenue growth. But this is a company that still lost $43.4 million in earnings over the first half of FY2023.
That's probably why Zip has just had to complete a $25 million capital raise. This was funded by the issuance of new shares.
Earlier this month, my Fool colleague Tony reported the thoughts of Shaw and Partners portfolio manager James Gerrish when it comes to the Zip share price.
Gerrish said that his team is not currently interested in Zip, stating that:
We can see Zip being a bit of a binary bet… It may rally multiples of where it is today if they can walk [the] tightrope. However, for us, we've been burnt on Zip in the past and we would want to see tangible evidence that the model can handle more external pressures and remain viable.
So we can probably conclude that there is still hope for Zip shares. But it really could go either way from here for this ASX BNPL share.
