Has the Zip (ASX:Z1P) share price fallen on Block’s ASX debut?

Zip shares are not reacting well to Afterpay’s departure…

| More on:
Woman looking sad while paying.

Image source: Getty Images

Key points

  • ASX BNPL pioneer Afterpay has left the building
  • In its place, Block shares have made their ASX debut
  • But how has the Zip share price reacted to its promotion to ‘biggest BNPL share’?

Today is a watershed moment for ASX buy now, pay later (BNPL) investors. Afterpay Ltd, long the pioneer of BNPL on the ASX as well as the largest BNPL share on offer for investors, has just left the building. So what does this mean for the ASX’s BNPL silver medallist, the Zip Co Ltd (ASX: Z1P) share price?

Yes, Afterpay shares are no longer available for investment. If you want a piece of the BNPL leader, you will instead have to buy the newly created Block Inc (ASX: SQ2) CHESS depository interests (CDIs). A Block share now represents an investment in Afterpay since the two companies are now effectively one.

But that also means that you will have to accept that all the other parts of Block’s business come with the deal as well. That includes Block’s uber-popular Cash payments app, as well as its holdings in cryptocurrencies like Bitcoin (CRYPTO: BTC).

So if an ASX investor wanted to remain invested in a pureplay BNPL company, Zip is the next cab off the rank in terms of market capitalisation, now that Afterpay has departed the ASX.

How has the Zip share price reacted to its new BNPL crown?

So how has the Zip share price reacted to its new place at the top of the ASX’s BNPL ladder?

Well, not too happily, as it turns out. Zip shares are currently down by a nasty 1.9% today, trading for $3.59 each at the time of writing. That’s actually a new 52-week low for Zip as of this Thursday. So if Zip shareholders were expecting a boost from the company’s promotion to the ASX’s top BNPL dog, unfortunately, that hasn’t turned out to be the case.

That might be especially disappointing for Zip’s investors, who watched the company deliver a second-quarter update this morning that had Zip’s strong growth on display.

As my Fool colleague James covered earlier, Zip reported a 53% year-on-year increase in quarterly transaction volume to a record of $2.6 billion. That was along with a 58% increase in quarterly revenues to $167.4 million. Customer numbers also grew by 57% to 9.9 million, helped enormously by strong growth in the US market.

Meanwhile, the ASX’s new Block shares have debuted and are trading at roughly $176.31 per share so far. That’s a lot more expensive than the $66.47 per share price that Afterpay closed at and left the ASX on yesterday. But then again, this is a whole different company that has taken Afterpay’s place.

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

Before you consider Zip , you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Zip wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Sebastian Bowen owns Bitcoin and Block, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Afterpay Limited, Block, Inc., and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Afterpay Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on BNPL shares

A male ASX investor sits cross-legged with a laptop computer in his lap with a slightly crazed, happy, excited look on his face while next to him a graphic of a rocket shoots upwards with graphics of stars scattered around it
BNPL shares

The Zip share price is rocketing 6% today. Here’s why

The buy now, pay later company is enjoying a change of fortunes today, along with its fellow ASX tech shares

Read more »

Two men shaking hands on a merger.
BNPL shares

Zip just joined forces with another ASX 200 company

A major airline now allows travellers to pay for their flight after they return home, in a landmark deal.

Read more »

Man with his head on his head with a red declining arrow and A worried man holds his head and look at his computer as the Megaport share price crashes today
BNPL shares

Zip share price dives to yet another multi-year low

The Zip share price is copping another hammering so far this Thursday...

Read more »

a woman looks exhausted and overwhelmed as she slumps forward into her hand while looking at her laptop screen.
BNPL shares

Why is the Zip share price down almost 25% in a month?

The BNPL company's shares are continuing to dwindle...

Read more »

Sad woman with her hand on her head and holding a credit card.
BNPL shares

Why is the Sezzle share price tumbling on Tuesday?

Sezzle shares are falling today after the BNPL provider released an update...

Read more »

a young man sits on the floor with his back against a sofa hunched over his phone in one hand and his other hand on top of his head as though he is seeing bad news as his face looks sad and anguised.
BNPL shares

Why is the Block share price sliding today?

The BNPL ASX share appears to be following in the footsteps of its US counterpart.

Read more »

A male party goer sits wearing a party hat and with a party blower in his mouth amid a bunch of balloons with a sad, serious look on his face as though the party is over or a celebration has fallen flat.
BNPL shares

Why did the Zip share price just pop then drop?

The Zip share price took off this morning before tumbling this afternoon. Could this be why?

Read more »

Upset woman with her hand on her forehead, holding a credit card.
BNPL shares

Why is the Sezzle share price tumbling 8% on Wednesday?

Why are Sezzle shares getting singled out for a thrashing today?

Read more »