Is there light at the end of the tunnel for the Zip share price in June?

Sad woman with her hand on her head and holding a credit card.Sad woman with her hand on her head and holding a credit card.

A popular question among investors is when the Zip Co Ltd (ASX: ZIP) share price will finally bottom?

The buy-now pay-later (BNPL) company’s shares have continued to tumble to new multi-year lows not seen since early 2018.

For context, Zip shares closed at 65.5 cents, down a massive 14.38% at yesterday’s market close. This represents their ninth multi-year low in just a month.

Can the Zip share price rebound in June?

Amid all the selling pressure on the ASX over the last few weeks, the Zip share price has felt the wrath of investors.

The company delivered its third quarter results in late April, acknowledging a shift in external factors.

As such, management adjusted its strategy and doubled down on its efforts on strong unit economics and fast-tracking profitability.

However, it’s worth noting that Zip is experiencing credit losses outside its target range, around 2.6% of total transaction volume.

And with interest rates rising in the current environment, particularly yesterday’s 0.5% increase, this won’t bode well for Zip customers.

Furthermore, United States tech giant Apple Inc (NASDAQ: AAPL) recently announced its inclusion to the BNPL space.

Called “Apple Pay Later”, the service offering won’t charge any interest or late payment fees to its customers.

This is yet another company that has joined the trend away from the traditional credit cards.

A number of major Australian banks such as Commonwealth Bank of Australia (ASX: CBA) have also promoted their own offering.

With the above factors taken into consideration, signs are pointing to another difficult month for Zip shareholders.

What do the brokers think?

One broker put out its thoughts on the Zip share price.

According to ANZ share investing, Macquarie cut its 12-month price target on the BNPL’s shares by 43% to $1.05.

Despite the steep reduction, the broker noted that it thinks it’s unlikely that the industry has reached maturity.

It further said that it doesn’t believe that this will lead to a rapid share market loss for Zip.

Based on today’s price, Macquarie’s estimate implies an upside of approximately 60%.

Zip share price summary

An unfavourable climate has led the Zip share price to lose 90% within the last 12 months.

This means you’d need its shares to climb 900% to break even.

No doubt, the company’s shares are a long way from ever nearing its all-time high of $14.53 in February 2021.

Zip commands a market capitalisation of roughly $526.27 million.

The post Is there light at the end of the tunnel for the Zip share price in June? appeared first on The Motley Fool Australia.

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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.

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