The short interest in Zip Co Ltd (ASX: Z1P) shares fell in early December and has remained flat since.
According to The Motley Fool Australia's weekly breakdown of the ASX's most shorted shares, the buy now, pay later (BNPL) company ended November with 9.4% short interest.
As of yesterday, the most recent data sees the company with a short interest of 9%.
So, what might be making short sellers slightly more bullish on the Zip share price? Let's take a look.
Why did the short interest in Zip shares drop?
Short sellers likely had a field day on the Zip share price in November – it tumbled 20% over the course of last month.
But things seemed to be looking more favourable for Zip in early December. The dip in its short interest could have been strengthened by a positive update released earlier this month.
On 7 December, Zip announced it saw its monthly transaction volume grow to $906.5 million in November – a 52% increase of the same month of 2020. It also saw the number of transactions using its service jump 86% to 7.5 million.
However, the broader BNPL sector's movements have been weighing heavily on the Zip share price lately. Of course, that's fantastic news for short sellers.
The company's stock has hit numerous new 52-week lows in December.
First, a particularly bad day for ASX tech shares saw the Zip share price tumble 10% to a new 12-month low of $4.34.
It also slumped 6% to another low of $4.05 on Friday amid news from a United States regulator.
The nation's Consumer Financial Protection Bureau had ordered Zip, along with 4 of its popular peers, to provide it with the pros and cons of its offerings. The companies' answers will help make up an inquiry into the BNPL industry.
All in all, those holding Zip's 9% short interest are probably having a joyous December – the company's share price has tumbled another 20% since the month began.
