The Zip Co Ltd (ASX: Z1P) share price hit a fresh 52-week low yesterday and almost broke that feat again today.
The company's shares reached an all-time high of $14.53 a little less than 12 months ago but bottomed out to a 52-week low of $2.68 in Monday's session.
The buy-now pay-later (BNPL) company's shares have struggled to gain composure since the start of last year.
During early morning trade today, Zip shares touched $2.685 before rebounding slightly higher. Currently, Zip shares are fetching for $2.72, up 0.74%.
What dragging Zip shares down?
Investors have continued to sell off Zip shares following negative sentiment across the tech industry.
Geopolitical tensions between Ukraine and Russia have spooked world markets, particularly on the Nasdaq. In the past month, the heavily tech-focused index has lost around 7.5% in value, and 14% since the beginning of the year.
This has had an adverse effect on the S&P/ASX All Technology Index (ASX: XTX), down 10% in a month, and 20% for 2022.
In addition, inflationary issues have not helped the cause, with the United States experiencing the largest rise in inflation in 40 years.
Australia has been experiencing its own inflation problems. The cost of living has risen 3.5% in the last quarter of 2021 alone. This was being blamed on high levels of building construction activity combined with shortages of materials and labour, as well as record automotive fuel prices.
The Reserve Bank of Australia signalled two rate hikes for 2022 in an effort to slow down the rising price of goods.
What this means is that consumers are less likely to spend on discretionary items when interest rates are picking up. The cost of debt on items such as credit cards, as well as personal loans, will require extra payments, affecting consumer spending habits.
Unfortunately for Zip, in the BNPL sector, this is the heart of its business model.
Investors will be watching closely when Zip releases its financial results later this month.
Is this a buying opportunity?
After reporting its FY22 second-quarter results last month, a number of brokers rated the company with varying price points.
Analysts at Macquarie slashed its price target for Zip shares by 40% to $3.40 apiece.
Following suit, the team at Citi also reduced its outlook by 38% to $3.65.
Both of these brokers believe there is still a significant value for the company's shares at current prices. This represents a potential upside of about 25% to 35% from where Zip trades today.
The latest broker note, however, came from Jefferies which also lowered its view by 39% to $2.73 per Zip share. It appears investors are more in line with the analysts' thoughts for the BNPL company.
Zip share price summary
Over the past 12 months, the Zip share price is down almost 80%. When looking at year to date down, its shares are down more than 37%.
Based on the current Zip share price, the company has a market capitalisation of around $1.6 billion.
