It's been a brutal time for buy now, pay later ASX shares – so it must be some relief for Zip Co Ltd (ASX: Z1P) to come first in a league table.
The Zip share price has dipped more than 11% this calendar year, but it's a shocking 64% plunge since the February peak.
However, when budget trading software Superhero on Monday revealed the most-traded stocks on its platform for the year, Zip won the honour of the stock with the most user transactions:
Top 5 most-traded ASX shares on Superhero
(between 1 January and 30 November 2021 inclusive)
- Zip Co Ltd
- Flight Centre Travel Group Ltd (ASX: FLT)
- Fortescue Metals Group Limited (ASX: FMG)
- Qantas Airways Limited (ASX: QAN)
- Afterpay Ltd (ASX: APT)
Not a great time for buy now, pay later
Ever since Afterpay's blockbuster takeover deal to Block Inc (NYSE: SQ) was revealed in August, the BNPL shares have suffered.
Perhaps the market thinks the sector is maturing? Investors could also be concerned about credit regulation coming in to stifle growth, or that other larger players will simply swallow all the little fish.
Despite the popularity on Superhero, sceptics are lining up to predict Zip shares will be diving even further.
On Monday, Zip stocks were reported to be one of the most shorted on the ASX at the moment.
The Motley Fool's James Mickleboro reported that 9% of Zip shares have been lent out for shorting, according to the Australian Securities and Investments Commission.
"Intense competition, concerns about rising industry fraud, and increasing costs could be weighing on sentiment."
The possibility of higher interest rates, combined with thirst for expansion, is also a worry, according to payments consultant Grant Halverson.
"The moment their bad debts go up their cost of funding will go up 3 or 4 times faster than the actual rate rises and the rating agencies will downgrade them, and then they'll get to junk status," he said in the Australian Financial Review.
"Because they're all frantically going at the US, they're racing to the bottom. And that means probably more bad debts because they've gone after customers who haven't got credit ratings."
