Zip (ASX:Z1P) share price tumbles 10% as top broker questions possible Sezzle play

Zip shares slipped today amid a wider sell-off of BNPL shares

| More on:
a group of business people sit dejectedly around a table, each expressing desolation, sadness and disappointment by holding their head in their hands, casting their gazes down and looking very glum.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has recommended Humm Group 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

Happy man wearing a blue shirt and glasses holding a card and using buy now pay later services to purchase a product on his office computer
BNPL shares

Why is the Zip share price jumping 11% today?

The Zip share price has finally given investors a break today.

Read more »

Man open mouthed looking shocked while holding betting slip
BNPL shares

Why did the Zip share price crash more than 50% in June?

Zip shares were sold off again in June...

Read more »

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

June was a terrible month for ASX BNPL shares. Here’s why

Last month brought more suffering for ASX BNPL stocks.

Read more »

BNPL written on a laptop.
BNPL shares

Could ASX BNPL shares be set for imminent regulation as spending swells to $12 billion?

Buy Now Pay Later shares could soon be facing more regulation.

Read more »

An angry man struggles with a broken zip in his jacket
BNPL shares

Zip shares sink 6% despite BNPL spend doubling this financial year

The BNPL company's shares are tumbling today. We take a look at why.

Read more »

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

Down 6%, what is dragging the Block share price lower on Wednesday?

What's going on with Block today?

Read more »

a woman with lots of shopping bags looks upwards towards the sky as if she is pondering something.
BNPL shares

Why this economist believes ASX 200 BNPL shares are key to keeping the market competitive

BNPL players have their place, this report says.

Read more »

Woman looking sad while paying.
BNPL shares

Zip share price bucks the trend with 5% fall. What’s happening?

The BNPL giant is back in the red on Monday.

Read more »