The Zip Co Ltd (ASX: Z1P) share price has been drifting since this time last year. This comes despite the buy now, pay later (BNPL) company enjoying a transformational 12 months as a global player in the industry.
However, in the past 12 months, Zip shares have made little headway, registering an increase of just 4%. In comparison, the S&P/ASX All Technology Index (ASX: XTX), the index has risen 35% over the same time frame.
At yesterday's market close, Zip shares finished the day down 2.48% to $6.69. They have not moved in early trade today.
What's going on with Zip?
Late last month, Zip provided investors with its full-year results for the 2021 financial year, highlighting strong numbers. However, the Zip share price sunk on the results.
The company's revenue jumped 150% over the prior corresponding period to $403.2 million. Transaction volumes surged 178.5% to $5.8 billion, while both active customers and active merchants accelerated 247.5% and 109.4%, respectively.
While the top-line results were a Herculean achievement, Zip posted a widening FY21 loss after tax of $652.5 million. In FY20, the BNPL company recorded just a $20.6 million loss.
Zip wrote off $74.5 million in bad debts during the financial year, up from $27.8 million in the previous financial year.
In addition, marketing expenses rocketed 649.5% to $71.2 million as the company launched into new locations.
But the biggest expense came from the group's share-based payments, jumping 125.1% to $142.8 million. The decision to attract, reward and retain "Zipsters" through a combination of short and long-term incentives weighed on the bottom line.
In a further possible blow to the Zip share price, the BNPL competition is beginning to ramp up as more entrants come into the industry.
PayPal Holdings Inc (NASDAQ: PYPL) recently acquired Japanese BNPL company Paidy to fuel its own growth.
Unfortunately for Zip, a rush of new direct players aiming to win global market share could be a concern.
National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA) have entered the BNPL space. And just this week, Suncorp Group Ltd (ASX: SUN) partnered with Visa Inc (NYSE: V) for a new BNPL solution.
This is on top of the direct competition that Zip is up against such as Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL).
Zip share price summary
It has been a whirlwind year for Zip investors. The company's shares rocketed to an all-time high of $14.53 in February, before quickly plummeting in the days after.
Ever since, the Zip share price has moved in circles, failing to gain traction despite achieving record revenue growth.
Zip commands a market capitalisation of around $3.7 billion, and has more than 562 million shares on its registry.
