The Zip (ASX:Z1P) share price has plunged 30% in 5 months. Is it a buy?

Thinking of buying Zip stock? Read this first.

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Zip Co Ltd (ASX: Z1P) has had a tough run lately, but one trading and investment specialist has noted its clients have been drawn to its embattled share price.

Saxo Capital Markets placed Zip stock as one of the top 10 most traded stocks among its Australian clients last month. And it had some choice words to say about the future of the BNPL provider’s shares.

Right now, the Zip share price is $6.86, having fallen another 1.86% today.

Let’s take a look at what’s gotten Saxo’s clients riled up about the Zip shares.

Is now a good time to buy shares in Zip?

According to Saxo, its clients have been enthused by the Zip share price’s recent troubles.

The Zip share price fell a massive 34% over the 6 months ended 31 August. Zip’s often holds a spot on the list of the ASX’s most shorted shares, leading to increased volatility.

But is it a buy? According to Saxo, it’s not.

Saxo stated that Zip’s results for financial year 2021 were noticeably less impressive than those of its competitor, Afterpay Ltd (ASX: APT).

Zip posted an after-tax loss of $653 million for FY21. For comparison, Zip reported a loss of just $20 million for FY20.

Whereas Zip’s BNPL peer, Afterpay, reported a loss of $159.4 million for FY21.

Additionally, Zip ended the period with 7.3 million active customers and 51,300 active merchants. While Afterpay reported it had 16.2 million active customers and 98,200 active merchants.

According to Saxo, Zip’s FY21 performance has caused the market to lose confidence in its ability to compete globally.

Additionally, Saxo pointed to Square Inc‘s (NYSE: SQ) $39 billion acquisition of Afterpay and the continued growth of unlisted BNPL giant Klarna, stating Zip simply might not be able to keep up with the future of the BNPL industry.

Despite its recent poor performance, the Zip share price has gained 29% in 2021. It is also 1.6% higher than it was this time last year.

Should you invest $1,000 in Zip Co right now?

Before you consider Zip Co, you'll want to hear this.

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The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

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Motley Fool contributor Brooke Cooper 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 AFTERPAY T FPO, Square, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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