It is fair to say that the Zip Co Ltd (ASX: Z1P) share price had a year to forget in 2021.
Over the 12 months, the buy now pay later (BNPL) provider's shares lost 18.1% of their value.
Though, this is only telling half the story. At one stage in February last year, the Zip share price was up as much as 175% year to date to a record high of $14.53.
From top to bottom, the company's shares shed over 70% of their value.
What happened to the Zip share price?
Investors were selling down the company's shares last year after investor sentiment in the BNPL industry waned.
This was driven by increasing competition, which led to higher than expected investments in sales and marketing (and therefore larger losses), and concerns over regulatory pressure in the United States.
In respect to increased competition, there were a number of industry events that caused alarm for ASX BNPL shareholders.
For example, last year PayPal removed merchant fees for its PayPal Pay in 4 product, reports claimed that tech behemoth Apple is interested in offering its own BNPL service, and Mastercard launched its Pay & Split solution.
Will its shares bounce back in 2022?
The team at Morgans remains positive on the Zip share price. Last week the broker retained its add rating but cut the price target on its shares by 12% to $7.54. This implies potential upside of 88% over the next 12 months.
The broker commented: "The [BNPL] sector is suddenly unloved by investors, so solid 1H22 results are required to change sentiment. We expect strong revenue growth for APT and Z1P (~100% on pcp), but we still expect both stocks to report 1H22 NPAT losses."
Though, it has also warned that Zip is one of several shares that "earnings visibility remains poor for" heading into reporting season.
