Zip Co (ASX:Z1P) share price hits 52-week low; here's why 

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Image Source: © Timonschneider | Megapixl.com

Highlights

  • Zip Co Limited hits a 52-week low of AU$1.220.
  • Since a long time, the information technology sector has been witnessing fall.
  • Of late, tech stocks have been under pressure worldwide due to increased anticipation of interest rate hike.

Share price of technology firm Zip Co Limited (ASX:Z1P) today slid 3.2% to trade at AU$1.210 per share at 2:30 PM AEST on the ASX. It surpassed the 52-week low of AU$1.220.

Zip Co Limited is a pioneer in digital payments and retail finance. 

Since a long time, the share price of Z1P has been seeing a bearish trend. Zip shares have lost almost 90% of their value to date since reaching a high of AU$12.65 in February 2021.

The overall information technology sector has been on a downfall of late, plummeting 20% in a year, and Z1P following the trend, has shed off 86%. The technology sector's performance has not improved in the last six months, with a 23% drop. Shares of the buy now, pay later (BNPL) payment provider have fallen out of favour, with a six-month drop of 83% and a YTD (year to date) drop of 72%. The technology firm's recent losing streak continues, with a decline of 23% in a month. 

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Good read: Z1P, ELO, SZL, WTC: How are ASX tech stocks performing today?

BNPL business model

While the BNPL market boomed from 2018 to 2021, several investors remained sceptical about the sector's long-term profitability prospects. Although, for some, the eye-watering rates of income growth that have been observed have put such concerns on hold. 

Source: © Robwilson39 | Megapixl.com

Earlier this month, the same concerns about future profitability arose. The half-year results for BNPL provider Afterpay, which is now owned by Block Inc (ASX: SQ2), were released, and the bottom line was not looking good. Moreover, last week Afterpay reported extensive losses in its interim results.  

Zip Co's half-yearly report

In its last half-year report, the firm reduced its losses from AU$455.9 million to AU$172.8 million. Zip's net losses over the 12-month were AU$658.8 million before this result.

Technology markets under pressure

Australian technology markets have remained under pressure recently as escalating concerns about China's lockdown impacted the global outlook for inflation and rising bond yields. As a result, Zip Co's share price is not looking so hot.

As inflation rises, tech stocks tend to be under more pressure than others. So far in 2022, tech stocks have been under pressure worldwide due to increased anticipation of an interest rate hike.

In Australia, while benchmarks such as the S&P/ASX 200 (ASX:XJO) recovered in March, the tech index has yet to recover.

In addition, S&P ASX ALL TECHNOLOGY [XTX] index plummeted 2% in one month. Today the index traded 0.58% higher at 2,438.10 points at 1:45 PM AEST.

Good read: FLT, BET, NAN, EML, WEB, PNV, Z1P: Seven most shorted ASX shares


 


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