Category: Stock Market

Tesla just missed delivery estimates. Here’s why it’s time to buy
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) is the largest and most widely followed electric vehicle (EV) company, so it should not be a surprise that its stock moved on its latest quarterly vehicle delivery report. What is surprising is which direction it went.

Shares dropped after the EV trailblazer reported third-quarter production and delivery results. Rather than bailing due to the lower-than-expected deliveries, investors should focus more on what the reaction means for the stock and what the underlying business is doing. That might change some sellers’ minds.

Look at production growth

Tesla reported a quarterly record with almost 344,000 vehicles delivered. Investors expected more and the report triggered a sell-off in the stock.

That reaction was despite the fact that those deliveries were 42% higher than the prior year period, and a 35% jump over the prior quarter. But none of those numbers are really what’s important for long-term investors.

What really mattered in that report was the nearly 366,000 vehicles Tesla actually produced in the third quarter.

That alone represents a pace of 1.45 million vehicles produced annually. And that comes despite several headwinds the company is facing right now. Many EV makers are having trouble getting parts, but Tesla is navigating supply chain disruptions well.

The company has had to deal with lockdowns disrupting production at its Shanghai facility, and it is still working through the challenges associated with ramping up its two newest facilities in Austin, Texas and near Berlin, Germany.

Investors shouldn’t be worried about the discrepancy between produced vehicles and deliveries in the third quarter, however. All of its production has buyers, but the company said it is working to find enough “vehicle transportation capacity and at a reasonable cost”.

Those logistics issues for shipping finished products are magnified thanks to the sharp increase in production growth. That’s a good problem to have and should really encourage investors rather than scare them.

Beyond just cars

Tesla isn’t just about electric cars, either. The company will share its full third-quarter results on Oct. 19, 2022, and there will likely be other news items of interest from that.

CEO Elon Musk has previously said he expects the Tesla Semi battery-electric truck to begin shipping this year and the Cybertruck next year. Those could both become further growth drivers for the company.

Tesla also should benefit from the Inflation Reduction Act (IRA) in several ways. The new law resumes tax credits for EV buyers for some manufacturers — including Tesla — that had surpassed prior production limits.

Those credits previously ended after a manufacturer sold more than 200,000 vehicles. The IRA now has limits on vehicle list prices and requirements for more of the supply chain to be based in the US.

Tesla’s lower-priced vehicles will be eligible under the price limit, and it already does some of its battery production domestically. The company is also now investigating whether to build a lithium refining facility in the US.

Its battery production gigafactories support internal production, but Tesla has also been increasing production of battery storage and solar systems that it sells to outside customers. In its second-quarter report, the company said it continues to ramp up Megapack storage production as customer interest “remains strong and well above our production rate”.

Why would some sell the stock?

However, some investors have a logical reason to sell the stock. Analysts expect earnings in the back half of 2022 to be 50% higher than the first half. If that comes to fruition, Tesla stock is already trading at a price-to-earnings (P/E) ratio of about 56 based on 2022 earnings.

That’s a high valuation in any market, and the recent market sell-off has many investors looking more for safety than risky assets.

But Tesla believes it still has several more years where it will boost EV production at a 50% annual rate. That would bring the valuation down relatively quickly and could give long-term investors winning returns.

Add in the other sides to its business, and it might be wise to take advantage of the recent drop in Tesla stock.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
The post Tesla just missed delivery estimates. Here’s why it’s time to buy appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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4 October 2022
Guess which ASX mining share is surging 40% on a new lithium find
The Eastern Resources Ltd (ASX: EFE) share price is surging higher on Tuesday.

In morning trade, the lithium explorer’s shares are up 40% to 4.2 cents.

Why is the Eastern Resources share price surging higher?

The catalyst for the rise in the Eastern Resources share price on Tuesday has been the release of a very promising announcement.

According to the release, Eastern Resources has become the latest mineral exploration company to report a significant discovery of lithium.

The release notes that the company has identified significant wide LCT pegmatites at the Trigg Hill project in East Pilbara, Western Australia.

This project is approximately 75km south-east of the Pilgangoora Lithium mine owned by Pilbara Minerals Ltd (ASX: PLS).

Positive results

Eastern Resources’ maiden drill program saw a total of 32 holes drilled for 1,972 metres. From these holes, 30 holes intercepted pegmatites. Furthermore, there was significant thickness of near surface pegmatites identified in multiple holes, up to 65m width from surface.

Eastern Resources’ executive director, Myles Fang, was very pleased with the drilling results. He commented:

We are highly encouraged with the discovery of significant wide LCT pegmatites at Trigg Hill project. The drill data information collected provides us significant information to progress the geological and metallurgical characterisation of the pegmatites at Trigg Hill Project.

A total of 642 drill samples have now been transferred to Perth for analysis at Nagrom. The company plans to utilise the results of the initial phase of drilling to support further drilling planning and targeting.

The post Guess which ASX mining share is surging 40% on a new lithium find appeared first on The Motley Fool Australia.

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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 Scott Phillips.

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4 October 2022
LiveTiles share price soars 22% on Bigtincan takeover news
It has been a difficult 12 months for the LiveTiles Ltd (ASX: LVT) share price.

But thankfully for its shareholders, there’s reason to smile at long last on Tuesday.

In morning trade, the intranet and workplace technology software provider’s shares are up 22% to 6.6 cents.

Why is the LiveTiles share price rocketing higher?

Investors have been bidding the LiveTiles share price higher today after it was confirmed that the company has received a takeover proposal.

According to the release, sales enablement platform provider Bigtincan Holdings Ltd (ASX: BTH) has tabled a confidential, non-binding, indicative proposal to acquire LiveTiles by way of scheme of arrangement.

Under the indicative proposal, LiveTiles shareholders would be entitled to receive 7 cents per share, less any dividends, or distributions paid to shareholders from this day onwards. And while Bigtincan is offering cash to acquire the company, shareholders will be given the option to receive part of the consideration in the form of Bigtincan shares.

Based on LiveTiles’ shares outstanding of 923,221,306, this implies a takeover price of approximately $65 million.

However, it is worth noting that discussions between the two parties are preliminary in nature and no agreement has been reached. Bigtincan also warned that there is no certainty that any transaction will eventuate.

LiveTiles has also responded to the news this morning and echoed Bigtincan’s warnings. It commented:

The Board of LiveTiles will carefully consider the Proposal and advise shareholders of its views once the Proposal has been assessed. In the meantime, shareholders should not take any action in response to the Proposal. There is no certainty that the Proposal will lead to a definitive transaction or offer being made for LiveTiles.

The post LiveTiles share price soars 22% on Bigtincan takeover news appeared first on The Motley Fool Australia.

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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 positions in and has recommended BIGTINCAN FPO and LIVETILES FPO. The Motley Fool Australia has positions in and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended LIVETILES FPO. 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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4 October 2022
Are CSL shares ‘starting to look more attractive’ in October?
The share price of S&P/ASX 200 Index (ASX: XJO) healthcare giant CSL Limited (ASX: CSL) outperformed last month. Could it be gearing up to do the same this month?

While experts are notably bullish on the biotech stock, the company is reportedly facing growing risks overseas.

The CSL share price is trading at $287.45 right now. That’s 2.9% lower than it started 2022.

Meanwhile, the ASX 200 has dumped 14.9% so far this year while the S&P/ASX 200 Health Care Index (ASX: XHJ) has slipped 11.9%.

So, what might October hold for the ASX 200 healthcare favourite? Let’s take a look.

What might October bring for CSL shares?

Plenty of brokers are bullish about the future of the CSL share price.

Indeed, Citi has tipped it to surge to a record-breaking $340 – representing a potential 18% upside, as my Fool colleague James reports.

Meanwhile, brokers Macquarie, Morgans, and Morgan Stanley have slapped the stock with respective $329.50, $321.20, and $323 price targets, with various factors driving their outlooks.

Now, Alphinity portfolio manager Stuart Welch has joined the chorus tipping big things for the ASX 200 favourite. The fundie said the company’s valuation is “starting to look more attractive relative to its history”. He told Livewire:

We’re certainly seeing a lot more donors coming into [plasma] donation centres and those volumes are ramping back up. Whilst that takes some time to come through the [profit and loss], because there is a seven-to-nine-month manufacturing cycle that you got to get through first, we are confident that that recovery is coming. And putting that together, volume recovery together with a bit of price, you can see a return to margin recovery as well.

But not everything appears bright for the company. Europe’s growing energy crisis might impact many of its factories and research and development centres, The Australian reports. Though, CSL is said to be preparing for all eventualities.

The company’s chief financial officer Joy Linton was quoted by the publication as saying:

CSL has been monitoring the European energy situation closely, particularly as it relates to energy supply for our Marburg site in Germany.

The EU Gas Emergency framework prioritises companies providing critical, lifesaving therapies so we have some assurance through that. We also have robust contingency plans that can be put in place at relatively short notice.

Additionally, not all brokers are bullish on the stock. Goldman Sachs, for instance, has a neutral rating and a $291 price target on CSL shares.

The post Are CSL shares ‘starting to look more attractive’ in October? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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. has positions in and has recommended CSL Ltd. and Goldman Sachs. The Motley Fool Australia has recommended Macquarie Group Limited. 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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4 October 2022
Why did the Bitcoin price outperform the NASDAQ in September?
The Bitcoin (CRYPTO: BTC) price has closely mirrored the moves in risk assets for most of 2022. With the caveat that the price moves of the world’s biggest crypto tend to be much larger. Both on the up and the down swings.

With the US Federal Reserve, and central banks the world over, ramping up interest rates, risk assets have come under tremendous pressure this calendar year.

From the beginning of trading in January through to 1 September, the Nasdaq Composite (NASDAQ: .IXIC) – a good proxy for investor risk appetite – fell 25%. The Bitcoin price dropped a precipitous 48% in that same time.

See what we mean.

But something odd happened in September.

Bitcoin price begins to decouple from equities

As central banks continued their aggressive tightening policies and guidance, September proved to be another tough month for stocks.

Sticking with the NASDAQ, the tech-heavy index fell 10.5% over the month.

With that in mind, we might have expected a 20% fall in BTC.

But here’s the thing.

The Bitcoin price kicked off September trading for US$20,105 and finished the month at US$18,694. (Give or take a few tens of dollars, depending on your time zone.)

That puts the world’s biggest token down just 2% over the month. That’s less than a fifth of the losses posted by the NASDAQ.

What’s going on?

The Bitcoin price did see some noticeable swings in September, hitting highs of US$22,673 and lows of US$18,290, according to data from CoinMarketCap.

But the fact that it held up so much better than the broader tech sector indicates the token is finding significant support at these levels.

Part of that looks to be due to increasing influence from long-term crypto investors as speculator influence wanes.

According to Stephane Ouellette, chief executive of FRNT Financial Inc: “Followers of the ecosystem have been excited to see correlations with risk assets begin to break, meaning the ‘fast-money’ speculative crowd may be losing their influence on the space.”

As for October?

The Bitcoin price is currently at US$19,543.

The post Why did the Bitcoin price outperform the NASDAQ in September? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. 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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4 October 2022
Why is the Paradigm share price rocketing 19% today?
The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price has returned from its trading halt in style.

In morning trade, the drug development company’s shares are up 19% to $1.50.

Why is the Paradigm share price rocketing higher?

Investors have been bidding the Paradigm share price higher today following the release of results from an osteoarthritis (OA) clinical study.

According to the release, the primary endpoint has been met for injectable PPS (iPPS) in the PARA_OA_008 phase 2 clinical trial.

The release explains that several OA biomarkers analysed were observed to favourably change over time in patients treated with iPPS compared to a placebo. Management notes that these biomarker changes provide insight into iPPS mechanisms of action as well as signals of disease modifying potential.

In addition, iPPS-treated subjects demonstrated statistically significant improvement in Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) pain, function, and stiffness scores at day 56 for the twice-weekly group compared to placebo.

This could be very good news for Paradigm as there is a significant market opportunity for an OA treatment. Management highlights that there were 303.1 million cases of hip and knee OA worldwide in 2017.

But it doesn’t stop there. In a separate canine study, positive interim observations on the effects of iPPS treatment on dogs with naturally occurring OA were also reported. Seven of nine dogs treated with iPPS had a clinically meaningful functional improvement in the affected limb.

‘Very encouraged’

Paradigm’s chief medical officer, Dr Donna Skerrett, was pleased with the results. She said:

We are very encouraged by the synovial fluid biomarker signals we see in this study. The observed changes indicate mechanistic effects through pain, inflammation, and chondroprotective pathways. These changes are consistent with the clinical effects observed in this and prior studies of iPPS in osteoarthritis.

Evidence of multimodal effects supports our understanding of the actions of iPPS. These biomarker changes in the joint, following subcutaneous administration of iPPS, demonstrate local effects in the synovial fluid. These are meaningful signals that we will evaluate together with clinical and imaging outcomes in order to demonstrate disease modifying effects and to pursue regulatory authority guidance on a disease modifying pathway.

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- 3 ASX All Ords shares that marched higher on Friday
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 Scott Phillips.

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4 October 2022
Credit Suisse has the market on edge. What should you do?
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The big news out of the financial sector over the weekend concerned investment bank Credit Suisse (NYSE: CS) and its financial health. Shares of the bank dipped to a new all-time low Monday morning before rebounding slightly, but many investors and analysts are deeply concerned about the Switzerland-based bank’s future.

Here’s a rundown of what happened, why investors are so concerned, and whether Credit Suisse is a bargain stock to consider for your portfolio.

Is Credit Suisse in trouble?

The short answer is that we don’t know for sure. The Financial Times reported that Credit Suisse was in discussions with investors to reassure them of the bank’s financial health. It was also reported that CEO Ulrich Korner sent a memo indicating that the bank is looking to raise capital. And without getting too deep into a discussion of derivatives, the bank’s credit default swaps — basically insurance against the bank defaulting on its debt — saw costs rise sharply, essentially indicating that investor confidence in the bank’s financial health was eroding.

Now, the bank’s management denies any major problems. In a note to CNBC, Korner spoke of the bank’s strong capital base and liquidity position. And separately, he denied reports that the bank needs to raise capital but did confirm that Credit Suisse is completing a strategic review. In fact, in his memo to staff, Korner said the bank was at a “critical moment” and would present its strategy update plans on Oct. 27. Analysts have speculated that the bank could sell some of its assets, and could potentially exit some of its markets, including the United States.

Why is the market worried?

The 2007-2009 financial crisis still leaps to investors’ minds when markets get turbulent. And the collapse of a major financial institution would trigger a wave of panic in the markets that another crisis is beginning.

Credit Suisse is a massive investment bank, with about $1.5 trillion under management and operations all over the world. To put this into perspective, Lehman Brothers — whose 2008 bankruptcy was a key event in the financial crisis — had less than $250 billion in assets under management (AUM) at the time of its collapse.

Still, analysts generally don’t see a worst-case scenario playing out here. A report by Citigroup analysts called the situation “night and day from 2007.” JPMorgan Chase called Credit Suisse’s capital position “healthy.”

Is Credit Suisse stock cheap now?

Credit Suisse is down by roughly 60% over the past year, trading at an all-time low. Shares of the investment bank trade for just 21% of book value (that’s not a typo). So, it may seem like a good time to buy the stock at a bargain.

However, keep in mind that there are significant risks to doing so. As mentioned, some experts think there’s a serious chance that Credit Suisse could collapse. And even though many think there’s a very low probability of that happening, there are plenty of bank stocks trading cheaply that aren’t having financial problems. For example, if you’re looking for an investment bank, Goldman Sachs is trading for less than its book value for the first time since the initial 2020 COVID-19 crash and is in solid financial shape.

There are other examples for sure, but the point is that it’s important to be able to distinguish between stocks that are cheap and stocks that are cheap for a reason. While a full collapse seems unlikely, Credit Suisse is definitely in the latter category.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Credit Suisse has the market on edge. What should you do? appeared first on The Motley Fool Australia.

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Matthew Frankel, CFP® has positions in Goldman Sachs. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs and JPMorgan Chase. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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4 October 2022
These were the worst-performing ASX ETFs in September
The S&P/ASX 200 Index (ASX: XJO) put up another lousy performance in September. It slid by 7.3% across the month to finish at 6,474 points.

But this single-digit fall stacks up rather favourably to some ASX exchange-traded funds (ETFs) that turned in disappointing performances.

Using data from Google Finance, let’s check out the worst-performing ETFs on the ASX in September.

Global X Hydrogen ETF (ASX: HGEN)

The Global X Hydrogen ETF found itself at the back of the pack, drudging up an 18.4% loss in September.

The HGEN ETF aims to provide investors with exposure to companies that stand to benefit from the advancement of the global hydrogen industry.

Some of its top holdings include Plug Power (NASDAQ: PLUG), a provider of turnkey hydrogen and fuel cell solutions, and Bloom Energy (NYSE: BE), a manufacturer and marketer of solid oxide fuel cells.

The HGEN ETF was formerly managed by ETF Securities before the ETF provider was taken over by Global X.

HGEN was one of the ASX’s best ETF performers in August. It climbed 8.2% across the month as investors bid up hydrogen stocks in anticipation of the Inflation Reduction Act being passed in the US.

It appears momentum ran out of steam in September. Sentiment towards these hydrogen companies turned sour, sending the HGEN ETF down with it.

VanEck FTSE International Property (Hedged) ETF (ASX: REIT)

The VanEck REIT ETF took out unwanted second place, crumbling 14.5% in September to finish the month at $14.98.

The REIT ETF aims to provide investors with exposure to a portfolio of international property securities from developed markets, excluding Australia.

The REIT ETF comprises around 340 companies. Some of the top holdings include Prologis Inc (NYSE: PLD), a global leader in logistics real estate, Equinix Inc (NASDAQ: EQIX), a data centre company, and Public Storage (NYSE: PSA), the largest self-storage company in the US.

Real estate investment trusts (REITs) are thought to be rather resilient in an inflationary environment as property prices and rental income keep up with inflation.

However, REITs have been battered and bruised this year over concerns about rising interest rates. In a rising interest rate environment, the high yields on offer from REITs become less attractive compared to lower-risk, fixed income options.

What’s more, REITs are mainly funded through debt, which becomes more expensive as interest rates head north.

SPDR S&P/ASX 200 Listed Property Fund (ASX: SLF)

ASX REITs weren’t immune to this selling pressure in September. As a result, the SLF ETF sat in third place with a 13.9% monthly fall.

The SLF ETF seeks to track the S&P/ASX 200 A-REIT Index (ASX: XPJ), which comprises the 24 REITs in the ASX 200 index.

Nearly one-quarter of SLF’s portfolio is weighted to Goodman Group (ASX: GMG). Other top holdings include Scentre Group (ASX: SCG), Dexus Property Group (ASX: DXS), Stockland Corporation Ltd (ASX: SGP), and Mirvac Group (ASX: MGR).

The SLF ETF has tumbled around 33% in the year to date as ASX REITs have been sold off on the back of rising interest rates.

The post These were the worst-performing ASX ETFs in September appeared first on The Motley Fool Australia.

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Motley Fool contributor Cathryn Goh 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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4 October 2022
Does the BHP share price have a strong outlook in October?
The BHP Group Ltd (ASX: BHP) share price has seen plenty of volatility in recent times. Is it going to rise in October and beyond? Or has it seen the best of 2022 earlier this year?

As Australia’s biggest company, what happens with BHP is important for both the economy and the S&P/ASX 200 Index (ASX: XJO).

BHP is a massive commodity business. That means that profit and sentiment can be highly influenced by changes in resource prices.

Iron ore has been the key profit generator for BHP over the past few years. The fall of the iron ore price by more than a third since April has seen the BHP share price drop by more than 25% to its current price of $38.60.

How are things looking for the BHP share price and commodities?

I think BHP is in a reasonable situation. It’s true that China is not paying the same amount for iron ore per tonne that it was earlier this year. But, demand can be cyclical – it’s not going to be the same every single year.

China has been affected by COVID lockdowns, a weakening outlook for the global economy, and uncertainty about its own housing sector.

Despite those issues, the iron ore price is still above US$90 per tonne and in Australian dollar terms, the price has improved as the Aussie dollar weakened compared to the US dollar.

On the coal side of BHP’s business, it is making a lot more profit as coal prices soar. This is offsetting a large part of the decline in profit from the iron business.

Copper prices have reduced, however, the company expects copper demand in the long term to grow as the world increasingly goes through electrification and decarbonisation.

What do analysts think of the business?

It’s difficult to forecast where resource prices will go next. However, there are a number of opinions out there on BHP.

The broker Macquarie has a price target of $44 on the business, implying that it could rise by more than 10% over the next 12 months. Macquarie thinks BHP can benefit from the strong coal pricing.

With the 2023 financial year in mind, the broker thinks the BHP share price is valued at 11x FY23’s estimated earnings with a projected grossed-up dividend yield of 9.7%.

The broker Morgan Stanley rates BHP as equal-weight, which is kind of like a hold, but the price target is $43.20, implying a possible rise of more than 10%. It recently increased its long-term forecasts for commodities like copper and iron ore.

One broker that isn’t so optimistic is UBS. It has a price target of just $35.50 on the BHP share price, which implies a possible drop of almost 10%.

It thinks that key commodity prices will fall over the next year or two, which could then impact BHP’s profitability.

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Motley Fool contributor Tristan Harrison 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 recommended Macquarie Group Limited. 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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4 October 2022
The Zip share price had another horror month. How much did it fall?
The Zip Co Ltd (ASX: ZIP) share price dropped in September, but by how much?

Zip shares fell 28% between market close on 31 August and 30 September.

Let’s take a look at why September was another tough month for the Zip share price.

Why did the Zip share price fall?

The Zip share price may have fallen in September, but it was not alone among the ASX Buy Now, Pay Later (BNPL) sector. Block Inc CDI (ASX: SQ2) shares descended more than 17% in September, while Sezzle Inc (ASX: SZL) slumped 28%.

The Zip share price has descended nearly 93% from a high of $12.35 on 19 February 2021.

Zip shares struggled in September amid rising interest rates, BNPL investor sentiment and broker downgrades.

Zip started the month on a sour note when it was booted out of the ASX 200 Index. The S&P Down Jones announced a quarterly rebalance on 2 September that applied from 19 September. The downgrade means Zip is no longer one of ASX’s top 200 shares by market cap.

In mid-September, the Zip share price fell amid calls for tougher regulations on buy now pay later (BNPL) providers in the United States. The U.S. Consumer Financial Protection Bureau (CFPB) unveiled plans to oversight BNPL lenders in the same way as credit companies.

The bureau’s director Rohit Chopra said:

We will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a Buy Now, Pay Later loan.

In late September, Seneca Financial Solutions senior investment advisor Arthur Garipoli recommended investors sell Zip shares. Commenting on Zip in a post on The Bull, Garipoli said “The outlook presents challenges in a tough economic environment”.

On a positive note, earlier in the month Jarden analysts sought to dispel “myths” on Zip credit losses and cash burn. Analysts noted Zip’s “tightening measures across the whole cycle to help contain its credit losses”. On cash burn, analysts said:

The Rest of World (ROW) strategic review is underway with predictions the second half will see Zip neutralise ROW cash burn.

The Reserve Bank of Australia (RBA) is due to meet on interest rates today. Experts are widely tipping the RBA to lift rates by 50 basis points.

Share price recap

Zip shares have lost nearly 90% in the past year, while it has fallen nearly 85% in the year to date.

For perspective, the ASX 200 has shed more than 10% in the past year.

ZIP has a market capitalisation of nearly $461 million based on the current share price.

The post The Zip share price had another horror month. How much did it fall? appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea 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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4 October 2022