Key points
- The Zip share price sank 9.66% today
- The news came amid mixed views on a potential acquisition of Sezzle by Zip Co
- Zip confirmed earlier this week it is in talks to acquire Sezzle
The Zip Co Ltd (ASX: Z1P) share price slumped today amid reports Citi analysts have concerns over the company's Sezzle Inc (ASX: SZL) takeover aspirations.
The ASX buy now, pay later company's shares finished the day trading at $2.90 apiece, down 9.66%.
Let's take a look at the latest chatter surrounding Zip.
Zip takeover talks get mixed reviews
The Zip share price fell nearly 10% today and is now down nearly 21% since market close on 19 January.
News that research analysts at Citi had mixed views on the possibility of Zip acquiring Sezzle may have weighed on investors' minds today. Of course, this was also against the backdrop of tumbling ASX tech shares, with the S&P/ASX All Technology Index (ASX: XTX) ending the day more than 5% lower.
A report in today's The Australian said Citi analysts have raised questions over whether a takeover of Sezzle is the correct strategy — despite the fact the acquisition could help Zip gain scale in the US buy now, pay later sector.
However, the analysts do seem to be in favour of some industry consolidation, reportedly saying, "From a sector perspective, we see the increasing consolidation activity as positive for industry profitability".
But the analysts also expressed some concern, adding, "…we do not expect the acquisition to meaningfully change Zip's enterprise retailer penetration immediately".
Earlier this week, Zip confirmed media speculation it is in talks with rival Sezzle over a possible acquisition.
In a statement to the ASX, Zip's board said:
Zip confirms it is in discussions with Sezzle in relation to a potential acquisition.
Zip is always interested in pursuing options that are in the best interests of shareholders; however the discussions with Sezzle are preliminary in nature and there is no certainty that the discussions will result in a transaction of any kind.
Zip is not the only ASX buy now, pay later stock that slipped in a horror day for the tech sector. Block Inc CDI (ASX: SQ2) dropped 5.35%, Openpay Ltd (ASX: OPY) dived 8.33%, and Sezzle sank 8.09%.
Humm Group Ltd (ASX: HUM) also descended 1.86%.
Zip share price snapshot
The Zip share price has crashed by 33% since the end of 2021. Over the past 12 months, Zip shares have lost almost 63%.
For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned just under 1% over the past year.
Zip has a market capitalisation of roughly $1.7 billion based on its current share price.
