It has been another disappointing day for the Zip Co Ltd (ASX: Z1P) share price on Thursday.
In morning trade, the buy now pay later (BNPL) provider’s shares fell over 5% to a new 52-week low of $4.78.
This means the Zip share price is already down almost 8% in December following a 20.5% decline in November.
Why did the Zip share price tumble in November?
The Zip share price tumbled last month despite the company releasing a strong trading update at its annual general meeting.
This weakness could have been driven by concerning reports in the United States which claim that fraud is rising in the BNPL industry.
According to CNBC, experts are saying that criminals are exploiting weaknesses in the application process for BNPL loans and stealing items ranging from pizzas to video game consoles. And while Zip wasn’t mentioned in the report, it still appears to have spooked some Zip shareholders and overshadowed its strong performance in October.
Speaking of which, at its annual general meeting management revealed that its strong total transaction volume (TTV) growth continued in October.
Zip’s Managing Director and CEO, Larry Diamond, commented: “October was Zip’s highest TTV month on record processing over $770m in transaction volume for the month, which was a 94% increase on October 2020, with the Company now annualising at over $9b. Off the back of the rebrand, October delivered a 24% MoM increase which provides outstanding momentum entering the seasonal peak period.”
Is this a buying opportunity?
While the recent pullback in the Zip share price is disappointing for shareholders, it could be a buying opportunity for non-shareholders.
That’s the view of the team at Morgans, which has an add rating and $8.56 price target on its shares. Based on the current Zip share price, this implies potential upside of 79% over the next 12 months.
Morgans commented: “We continue to see longer term upside if Z1P can continue to execute on its ambitions of becoming a global payments player.”