The carnage continues: Why the Zip share price has hit 7 multi-year lows in a month

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after the Zip share price fell again todayA young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after the Zip share price fell again today

The Zip Co Ltd (ASX: Z1P) share price hit a fresh multi-year low of 79 cents yesterday.

The buy now, pay later (BNPL) company’s shares continue to be volatile, with investors probably questioning where the bottom is.

Unfortunately, not even legendary investor Warren Buffett can accurately predict where falling shares will stop.

Over the past month alone, the Zip share price has hit seven multi-year lows.

At Thursday’s market close, Zip shares finished at 80 cents, down 4.79%.

What’s dragging Zip shares down?

Investors have continued to sell off Zip shares due to negative sentiment across the financial industry.

The word “recession” has been a major talking point for economists in recent times following debates on whether or not one is around the corner. This is being driven by high inflation, a tightening monetary policy, and concerns about a global economic slowdown.

The S&P/ASX 200 Financials (ASX: XFJ) sector ended yesterday in the red, down 1.21% to 6,545 points. When looking at the past month, the index is down 2.4%.

Consumer confidence is being weighed down as the United States experiences the biggest rise in consumer prices in 40 years.

Australian consumer prices have surged at the fastest annual pace in 20 years.

The Reserve Bank of Australia updated its statistics to show inflation climbed by 5.1% in the March quarter.

Key contributors included record fuel prices, and the rising costs of construction due to high demand but low supply of building materials and labour.

However, in an effort to slow down the rising price of goods, the RBA has intervened.

Last month, Australia’s central bank decided to lift its official cash rate to 0.35%, the first rise since 2010.

In essence, this means that consumers are less likely to spend money on discretionary items when interest rates are picking up and increasing the cost of their debt.

We will have to wait until next Tuesday to see if the RBA will again increase interest rates.

Zip share price summary

It has been a whirlwind 18 months for Zip investors.

The company’s shares rocketed to an all-time high of $14.53 in February 2021 but have plummeted ever since.

In the past 12 months, the Zip share price has fallen by almost 90%. This means it would need to increase nine-fold to break even.

Based on today’s price, Zip presides a market capitalisation of approximately $574 million.

The post The carnage continues: Why the Zip share price has hit 7 multi-year lows in a month 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

More reading

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/kQ6mTSN

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s