The Zip Co Ltd (ASX: ZIP) share price is receiving a severe pruning on Thursday.
Shares in the global buy now, pay later (BNPL) company are 8.4% worse off than yesterday, trading at 38 cents apiece as we pass the closing bell. As a reference point, fellow payment technology company Block Inc (ASX: SQ2) is 1.06% lower.
It's difficult to say what precisely is causing such affliction among Zip shares today without an announcement from the company. However, a few developments could be filtering into some decision-making among shareholders — including an upcoming milestone for smaller BNPL player Sezzle Inc (ASX: SZL).
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Is Sezzle stealing the limelight from Zip?
Despite being less than one-third of the market capitalisation of Zip, Sezzle plans to make a big splash with investors tonight.
After proposing a direct listing on the Nasdaq Global Market in March, the company is set to make its official debut tonight. Listing on exchange in its home country, Sezzle shares are expected to begin swapping hands under the 'SEZL' ticker symbol once US trading commences.
You might be wondering: how does this relate to the Zip share price? Well, there is a chance it has brought the company to the attention of Zip shareholders. Upon further inspection, those Zip investors might have switched teams after preferring the grass on the other side.
For example, Sezzle has delivered positive net income for the past four quarters. In contrast, Zip posted a net loss of $1.15 billion for the 12 months ending 31 December 2022. Similarly, Sezzle has a net cash position on its balance sheet, while Zip does not.
There's no definitive evidence suggesting Zip shareholders are opting out for Sezzle shares instead. Though, the two have starkly different moves in share price. Shares in the soon-to-be Nasdaq debutant are up 10.5% to $19.20 this afternoon.
What else could be hurting the Zip share price?
Two other factors that might be pressuring Zip shares today are the latest unemployment data and ASX retail results.
Firstly, the Australian Bureau of Statistics revealed the unemployment rate rose to 3.7% in July. This was weaker than the 3.6% expected by commentators. Approximately 14,000 jobs were removed in July, indicating higher interest rates are taking effect.
Secondly, ASX retail shares have been handing down their results this week. Some of those reporting have revealed a slowing of growth in recent months. Super Retail Group Ltd (ASX: SUL) is one example today, revealing flat group sales growth in the first six weeks of FY24 versus a 9% increase in FY23.
Weakness in consumer spending is not a good sign for a company like Zip, which is intrinsically linked to discretionary spending. Hence, the above factors could also be dragging on today's Zip share price.
As shown in the chart above, Zip shares have fallen more than 60% over the past 12 months. This represents an extreme underperformance of the S&P/ASX 200 Index (ASX: XJO), which is mostly flat compared to a year ago.
