Why is the Zip share price sinking 5% on Monday?

The Zip Co Ltd (ASX: ZIP) share price continues to retrace on Monday following its heavy sell-off last week.

At the time of writing, the buy now, pay later (BNPL) company’s shares are swapping hands at 99 cents, down 4.81%.

This comes after the share dropped more than 20% last week as investors took profit off the table.

It is worth noting that Zip shares accelerated from a multi-year low of 43.5 cents on 23 June to a high of $1.52 on 28 July, representing a 250% gain.

Let’s look at what’s causing the BNPL’s shares to stall again today.

Why are Zip shares tanking?

The Zip share price is coming under selling pressure following negative sentiment across the broader sector.

To compare, the S&P/ASX 200 Financials Index (ASX: XFJ) is recording a 1.3% loss today.

Re-emerging fear about more aggressive interest rate hikes from the Federal Reserve appears to be weighing down investor confidence. This is having a rampant effect on the Aussie stock market.

The Dow Jones Industrial Average futures is down by 126 points, or 0.37%.

The S&P 500 and Nasdaq 100 futures are also in the red by 0.39% and 0.47%, respectively.

It could be a volatile week ahead on the back of Fed Reserve chair Jerome Powell’s latest comments on inflation.

Similarly, other shares in BNPL companies are heading south today.

The Block Inc (ASX: SQ2) share price is down 6.58%, fetching $107.33.

On the other hand, shares in Sezzle Inc (ASX: SZL) are backtracking 6.29% to 74.5 cents.

Zip share price snapshot

In early 2021, the Zip share price reached an all-time high of $14.53.

It was also valued more than popular retail chain JB Hi-Fi Limited (ASX: JBH).

However, those days seem like a distant memory as the BNPL provider reversed its historic gains. Now it commands a market capitalisation of around $715.50 million, well under the $4.84 billion that JB Hi-FI is currently worth.

Year to date, Zip shares are down by roughly 77%.

The post Why is the Zip share price sinking 5% on Monday? appeared first on The Motley Fool Australia.

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More reading

• Why is the Block share price tumbling 6% today?
• These are the 10 most shorted ASX shares
• How does Zip’s ‘Operation Blue Sky’ stack up against Block’s battening down of the hatches?
• Why is the Zip share price behaving so strangely on the ASX today?
• Here are the top 10 ASX 200 shares today

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 positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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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