Why are Zip (ASX:Z1P) shares being shorted in November?

A young girl wearing a leather jacket with zips looks up slyly with one eyebrow raised.

Zip Co Ltd (ASX: Z1P) has seen short interest in its shares increase in November.

According to data from the Australian Securities and Investments Commission (ASIC), on Monday last week 9.07% of the buy now, pay later (BNPL) service provider’s shares were being held in short positions. That’s nearly 1% more than were being shorted this time last month.

Additionally, as short sellers’ interest in the stock has increased, the Zip share price has slipped.

Since the month began, the Zip share price has fallen 9.08%. At Friday’s close, Zip shares were swapping hands for $5.91 apiece.

Let’s take a look at what might be drawing short sellers to the BNPL giant.

Why are short sellers targeting Zip?

Fortunately or unfortunately, there’s no clear answer as to why short-seller interest in Zip shares has increased in November. Particularly as the market has only heard good news from the company.

The most recent news from Zip was that it had completed its acquisition of European BNPL provider Twisto Payments.

The acquisition cost Zip $115.8 million. The company stated the purchase will provide a “gateway” into the European market.

Further, the quarter just been was a record-breaking one for Zip.

Over the 3 months ended 30 September, the company brought in $136.8 million of revenue and facilitated 14.7 million transactions. Those figures are up 89% and 177% respectively on the company’s first quarter of financial year 2021.  

The same quarterly update that announced the record-breaking performance also proclaimed the company’s completed rebrand.

The rebrand saw Quadpay become Zip in the United States, as well as the company launching its new look.

Zip share price snapshot

Despite the poor performance of Zip shares through the first half of November, they are still in the long-term green.

Right now, the Zip share price is 5% higher than it was at the start of 2021. However, it has fallen 1.5% since this time last year.

The post Why are Zip (ASX:Z1P) shares being shorted in November? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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