The rollercoaster ride for the Zip Co Ltd (ASX: Z1P) share price continues on Wednesday, tumbling 9.2% to $7.50.
What’s driving the Zip share price selloff?
Investors might be selling their Zip shares today in response to another giant entering the buy now pay later (BNPL) space.
This morning, Bloomberg reported that Apple is working on a new BNPL service with classic interest-free instalment features.
The report said that Apple will be teaming up with another behemoth, Goldman Sachs, to act as the lender for the BNPL loans.
While Zip might be the second-largest ASX-listed BNPL player, it pales in comparison to the US$2.4 trillion giant that is Apple.
Whipsaw-like action for Zip
The Zip share price has displayed immense volatility in the last month.
Looking back, the broader BNPL sector bounced back in late June, with the Zip share price closing at a 2-month high of $8.78 on 24 June.
By 6 July, Zip shares had tumbled 17.5% to $7.25.
Just as things began to look bearish for Zip, rumours emerged that a rival BNPL provider had acquired a strategic stake in the company.
According to the Australian Financial Review, Swedish based rival Klarna acquired a 4% stake in Zip.
The report suggests this move was “designed to give it options should the buy now, pay later sector consolidate down to two or three main players globally”.
These rumours sent the Zip share price surging back to 2-month highs of $8.88 by 9 July.
Today, the Zip share price has tumbled back to $7.50 at the time of writing.
For investors who purchased Zip shares in late January or May, this would mean returns have slipped back to square one.