It was another tough week for the Zip Co Ltd (ASX: ZIP) share price.
Investors were selling down the buy now pay later provider’s shares following the release of its third quarter update.
While that update revealed growth that most companies would be proud of, it still fell short of the market’s expectations.
This was compounded by the worsening of credit losses and concerns over lower frequency of use and the impact that its bold cost reduction plans could have on its growth.
The Zip share price ultimately ended the week 10% lower than where it started it at a lowly $1.10. This means its shares are now down almost 75% since the start of the year.
Is the weakness in the Zip share price a buying opportunity?
According to a note out of Citi at the end of last week, its analysts continue to sit on the fence with the Zip share price.
Although the broker acknowledges that Zip is pulling the right levers, it highlights that risks remain.
In light of this, the broker has put a neutral (high risk) rating and $2.15 price target on the company’s shares.
Citi commented: “While TTV growth was slower than expected and bad debts in AU increased qoq, on balance we see the 3Q update as positive with customer growth in the US accelerating in spite of tightening of risk settings, net transaction margins improving and Zip reducing costs faster than expected. “
“While stronger-than-expected growth on the back of Enterprise merchant additions represents upside potential, we are Neutral/High Risk (2H) rated as we are concerned about the potential for bad debts to remain elevated and the impact to top line growth from cost reduction measures.”
The post Is the Zip share price weakness a buying opportunity? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Zip right now?
Before you consider Zip, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Zip wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
- Top brokers name 3 ASX shares to sell next week
- Why BHP, Megaport, OZ Minerals, and Zip shares are dropping
- Zip share price hits new multi-year low after brokers turn even more bearish
- Zip share price higher at last: Here are key takeaways from the Q3 update
- Zip share price edges higher amid third quarter update
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.
from The Motley Fool Australia https://ift.tt/JcxhpgM