The Zip Co Ltd (ASX: Z1P) share price is suffering this year, falling more than its fellow ASX-listed buy now, pay later (BNPL) peers.
And the past 30 days have seen that gap widen. Australia’s biggest BNPL stock has seen its value tumble by around 24% since this time last month. The Zip share price is currently down 3.95% today at $1.58.
For context, the second worst-performing ASX BNPL share is Sezzle Inc (ASX: SZL). Its stock has slipped around 7% over the last month.
Let’s take a look at what might be dragging on the Zip share price lately.
What’s behind the ZIP share price’s recent tumble?
Zip’s stock has tumbled 64% since the start of 2022.
That sees it taking the rear among its BNPL peers, of which Humm Group Ltd (ASX: HUM) has come out as one of the best performers. It has fallen just 12.5% in 2022.
However, the Zip share price has really underperformed over the last month, despite the announcement of a major acquisition.
As most market watchers will be aware, Zip and Sezzle are planning to come together in an all-scrip acquisition by the September quarter, subject to approvals.
Brokers’ mixed opinions regarding the transaction might have weighed on the BNPL provider’s stock lately.
Additionally, Zip’s recent $148.7 million capital raise and the release of its half-year results might have further dampened market enthusiasm for the company’s share price.
Zip officially released its half-year results late last month, detailing an 89% increase in revenue and a 92% increase in transaction volumes.
However, rising costs (the company’s cost of sales increased 192.5% last half) pushed Zip’s gross profits 23.2% lower.
Zip also offered 78.3 million new shares for $1.90 apiece as part of its recent institutional placement. At the time, the offer price represented a 14% discount to Zip’s stock’s previous closing price.
Finally, Zip is currently undergoing a share purchase plan, offering eligible shareholders the option to buy up to $30,000 worth of shares.
Under the plan, each new share will cost participating investors either $1.90 or a 2% discount on the Zip share price’s five-day volume-weighted average price for the period ending 1 April, whichever is lesser.
All that is likely weighing on the BNPL giant’s stock and might be causing it to underperform its peers.
The post Why is the Zip share price getting smashed so much more than other BNPL stocks in 2022? 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 and has recommended ZIPCOLTD FPO. The Motley Fool Australia has recommended Humm Group Limited. 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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