The Zip (ASX:Z1P) share price has slumped 26% in 8 days

Despite record FY21 half year results this week, the Zip (ASX: Z1P) share price finds itself down by nearly 20% this week. What’s going on?

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asx share price falling lower represented by investor wearing paper bag on head with sad face

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Despite nearly doubling this year, Zip Co Ltd (ASX: Z1P) shares have taken a beating in the last two weeks. As the trading week draws to an end, the Zip share price is sitting on falls of more than 26% since the market’s close on Tuesday last week. 

So what’s going on?

Why is the Zip share price so volatile this week? 

The Zip share price has slumped by more than 18% this week alone despite the company reporting strong levels of growth across the board in its FY21 half-year result

Results aside, the broader market could be the one to blame for the weakness in the Zip share price. 

This week, rising bond yields have taken centre stage as higher yields signal higher borrowing costs and inflation.

Higher borrowing costs could impact businesses and economic growth. Meanwhile, higher yields can put pressure on interest-sensitive sectors of the share market including  S&P/ASX 200 Index (ASX: XJO) tech shares. Elsewhere, cyclical sectors that typically generate strong cash flows such as financials, real estate, materials and utilities tend to perform better under higher interest rates. 

We are also seeing the impacts of rising bond yields play out in the United States. The tech-heavy Nasdaq Composite (NASDAQ: .IXIC) has slumped 5% this week while the S&P 500 Index (SP: .INX) is flat and the Dow Jones Industrial Average Index (DJX: .DJI) is down 2%. 

Its not just the Zip share price 

The Zip share price is not alone in its recent slump. Its buy now, pay later (BNPL) peers have also stumbled by similar amounts. 

The Afterpay Ltd (ASX: APT) share price is currently down by more than 22% this week after hitting a record high of $160.05 last week. 

The Sezzle Inc (ASX: SZL) share price is also down around 19% after the company announced record growth for CY20 and strong positive trends continuing in the new year

Elsewhere, the likes of Openpay Group Ltd (ASX: OPY), Laybuy Holdings Ltd (ASX: LBY), Splitit Ltd (ASX: SPT) and Humm Group Ltd (ASX: HUM) are all down between 5% and 20% this week. 

The S&P/ASX Information Technology Index (ASX: XIJ) has also fallen 13% this week, compared to the approximate 1.4% drop for the ASX 200. 

Market awaiting US listing rumours

Speculation that management was exploring a dual listing in the US caused the Zip share price to surge by around 20% on 8 February. 

The company’s FY21 half-year results did not provide any update on funding or dual listing rumours. 

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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle Inc. 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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