The Zip Co Ltd (ASX: Z1P) share price has continued to grind lower, shedding another 12% to finish the month of May at $7.04.
The Zip share price just doesn't quite feel the same after its February record highs, with brief rallies in mid-April and late-May quickly losing momentum.
May was a relatively quiet month for Zip as far as announcements are concerned. But the one announcement it did make, was rather a big one.
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Zip announces expansion into Europe and Middle East
On 24 March, Zip announced its strategic move to acquire the remaining shares of its minority investments in European BNPL provider Twisto Payments and UAE-based BNPL provider Spotii.
The Twisto acquisition would give Zip access to 27 countries in the European Union, with an estimated e-commerce market of $1.1 trillion. The company itself has already hit the ground running, with an annual run-rate of $12 million in revenue and $230 million in total transaction values. To add some perspective, Openpay Group Ltd (ASX: OPY), which has a market capitalisation of $175 million, delivered an FY20 revenue of $18 million.
Bringing on board Spotii establishes Zip as a leading BNPL player in the Middle East. Founded in 2020, Spotii is already operational in the United Arab Emirates and Saudi Arabia with an average 90% increase in month to month total transaction volume since inception.
Despite cementing its ownership in international BNPL companies, the Zip share price has since retreated to the same levels it was before the announcement.
Why the Zip share price struggled to rally in May
The BNPL sector may have lost some of its gloss after its selloff in late February. Positive announcements such as strong business updates, new product launches and international expansion announcements aren't seeing the share price movements that we used to see. And the Zip share price is leading by example with its international expansion announcement hardly bringing back any confidence.
Zip's peers including Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL) also failed to inspire any confidence in the BNPL sector, falling 20% and 22% respectively in May.
On Wall Street, Affirm Holdings Inc (NASDAQ: AFRM) also added to the bearish sentiment, making record lows of US$46.50 on 11 May.
