Zip (ASX:Z1P) share price down 7% despite crypto plans and positive outlook

Zip could be launching crypto trading in the next 12 months…

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The Zip Co Ltd (ASX: Z1P) share price is tumbling notably lower on Thursday.

In afternoon trade, the buy now pay later (BNPL) provider’s shares are down a sizeable 7.5% to $7.02.

Why is the Zip share price sinking?

Investors have been selling down the Zip share price after its fourth quarter update fell short of the market’s lofty expectations.

Although Zip delivered growth that most companies would be proud of, it fell short of the market’s lofty expectations.

Crypto launch coming?

Also failing to give the Zip share price a boost today have been comments by the company’s Co-Founder, Peter Gray, in respect to future plans.

Mr Gray told Dow Jones Newswires that Zip’s customers remain interested in Bitcoin and other cryptocurrencies despite recent pullbacks in their prices. The company also has its eyes on other less-traditional finance products.

He said: “We’re interested in delivering more relevant features, crypto being one of them that is becoming part of a younger generation’s financial diet. The ability to save and receive high-interest coupons that aren’t similar to a savings account offered by a bank.”

The company is aiming to a launch crypto trading service within the next 12 months.

PayPal BNPL offering

One thing that has been weighing on the Zip share price recently has been increasing competition. This follows the launch of a PayPal BNPL service and speculation that Apple could be entering the arena.

However, the co-founder doesn’t appear concerned by PayPal. In fact, he revealed that he was confident that its entry would increase the size of the market rather than be a threat.

In addition to this, Gray advised that the increased competition isn’t impacting its margins at this point. He also revealed that the outlook remains positive for its margin.

He told the news outlet: “It’s very strong and there’s no short-term pressure coming on that margin. So a very good outlook for margin.”

Is Klarna interested in a Zip takeover?

One thing that has been getting investors excited recently is speculation that Zip could be a takeover target of larger rival Klarna. This follows unconfirmed reports that the Sweden-based BNPL provider has been building a strategic stake in the company.

However, Mr Gray revealed that the company continues to comply with its market disclosure obligations. Which essentially means that the company is not aware of any interest, otherwise it would have to say so.

Though, he acknowledges that if there were interest, it would be a testament to the good job the company is doing in the BNPL market.

“We’re always interested in delivering the best outcomes for Zip shareholders. Any sort of speculation of interest would clearly be validation of the success that we’ve had the way we have tackled the opportunity,” Mr Gray said.

The Zip share price is up 25% so far this year despite today’s weakness.

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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. owns shares of and has recommended ZIPCOLTD FPO. 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 Bruce Jackson.

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