It has been a week of losses for the Zip Co Ltd (ASX: Z1P) share price. This afternoon is no exception for the underwhelming week that has been.
Shares in the buy now, pay later company are trading 2.65% lower to $6.98 in afternoon trade. The continued weakness takes the total losses for the week to 11%, underperforming the benchmark index. For reference, the S&P/ASX 200 Index (ASX: XJO) is down approximately 2.1% over the past week.
Let's review the past week's past events.
What's been influencing the Zip share price?
Although there haven't been any direct announcements from or concerning Zip, there are a few items over the past week that could be weighing on the Afterpay Ltd (ASX: APT) competitor.
Firstly, as we covered earlier in the week, the Zip share price continues to feature in the 10 most shorted ASX shares.
More specifically, the payments company landed at the third spot on the list with a 10.1% short interest. Though, this has been falling over the last few weeks. It seems short-sellers are less daring with merger and acquisition activity appearing in the BNPL sector.
Additionally, The AFR reported on some data that may have frightened BNPL investors. This data regarded the level of bad debts or receivables impaired compared to revenue for some of ASX's big names in instalments. Reportedly, impaired receivables as a percentage of revenue are as follows:
- Afterpay at 17.3% with $72.1 million in impairments expense
- Zip at 18.3% with $29.5 million in impairments expense
- OpenPay at 46% with $7.9 million in impairments expense
Lastly, Zip revealed it will be reporting its results for the financial year ended 30 June 2021 on Wednesday 25 August 2021.
Typically share prices are quite volatile when a company reports its earnings — a 10% movement or more is not all too uncommon. As such, anyone that might be feeling a little iffy on the upcoming results could be taking some risk off the table this week.
What do brokers think?
Analysts over at Citi are still expecting upside in the Zip share price ahead. The broker recently retained its buy rating with a price target of $8.90.
Further to this, the broker is bullish on the company's US business, Quadpay.
Despite the recent weakness, the Zip share price is up 7% over the past year. At the time of writing, Zip hold's a market capitalisation of $3.92 billion.
