Why is the Zip (ASX:Z1P) share price faring so much worse than Afterpay today?

One reason Zip’s stock might be tumbling further than that of its peer is its recent short position.

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The Zip Co Ltd (ASX: Z1P) share price is plummeting today as the S&P/ASX 200 Index (ASX: XJO) battles through a brutal Monday.

Interestingly, the buy now, pay later (BNPL) company’s major competitor, Afterpay Ltd (ASX: APT), isn’t struggling nearly as much.

While the Zip share price has fallen a significant 6.45% to trade at $6.44, Afterpay’s stock is recording a 1.87% slip.

Let’s take a look at what might be making the Zip share price heavier than Afterpay’s.

Why’s Afterpay outperforming Zip on the ASX today?

The Zip share price is sliding today as the ASX 200 spirals.

Meanwhile, fellow BNPL company Afterpay is undergoing only some of the struggle, recording a nearly 2% drop.

One reason Zip’s stock might be tumbling further than that of its peer is its recent short position.

According to ShortMan, an online tracker of shorted ASX stocks, 9.05% of Zip’s shares were in short positions last Monday.

For comparison, only 1.06% of Afterpay’s shares were in short positions this time last week.

This could be weakening the Zip share price, especially as the broader market pushes through a disastrous day.

Additionally, Afterpay’s stock might be outperforming that of Zip because its potential buyer is outperforming its own market.

While most of Australia slept, the NYSE Composite (INDEXNYSEGIS: NYA) fell 0.7%. However, the Square Inc (NYSE: SQ) share price kept its head above water, recording a 0.25% gain.

Of course, Afterpay expects to put Square’s $39 billion takeover to its shareholders this quarter.

Square’s recent performance could be providing additional support to the Afterpay share price since, if all goes to plan, Afterpay shareholders will soon be holders of Square stock (or CHESS depository interests).

Zip share snapshot

Despite today’s dip, the Zip share price has been performing well on the ASX lately.

It is currently 15% higher than it was at the start of 2021. It has also gained 6.8% since this time last year.

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

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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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