Zip share price sinks following share purchase plan results

Zip shares are having another shocker day.

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illustration of laptop with down arrow and the word zip representing zip share price going down.

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Key points

  • Zip shares fall 4.85% to $1.47 following completion of the company's share purchase plan 
  • Zip raised a total of $23.98 million from retail investors, issuing shares at $1.48 each 
  • The final result of the share purchase plan is a strong underachievement on the $50 million the company was targeting for 

The Zip Co Ltd (ASX: Z1P) share price is heading south today, nearing its 52-week low of $1.40.

This comes after the buy now, pay later (BNPL) provider announced the results of its recent share purchase plan (SPP).

At the time of writing, Zip shares are swapping hands for $1.47, down 4.85%. For context, the S&P/ASX 200 Index (ASX: XJO) is down by around 0.8% and fellow fintech share Block Inc (ASX: SQ2) is slumping by almost 7%.

What were the results of Zip’s SPP?

In a statement to the ASX, Zip advised it has completed its SPP.

In total, the company raised around $23.98 million – a significant shortfall of the $50 million offered to retail investors.

It appears that concerns the Zip share price could fall further led eligible shareholders to watch from the sidelines.

And indeed, they were right.

The final issue price under the SPP is $1.48 per share.

However, the company’s shares fell to an intraday low of $1.46 today. This means you could have picked them up cheaper than the SPP.

For those who did participate under the placement, the allotment of the new shares is scheduled for this Friday. Normal trading of the new shares will commence on Monday 11 April.

Recently, the company successfully completed a $148.7 million institutional placement from a number of institutional, sophisticated and professional investors. The price listed under the placement was $1.90.

Zip previously noted that the proceeds of its capital raising efforts will go towards strengthening its balance sheet.

In addition, it is also looking to shore up funds to execute on the potential synergies from the upcoming transaction. This relates to the $491 million all-scrip acquisition of Sezzle Inc (ASX: SZL).

Zip share price summary

The Zip share price is down more than 85% since its 52-week high of $10.61 reached in April 2021.

The company’s share price has continued a downward trajectory, wiping off significant value on investor portfolios.

On valuation grounds, Zip has a market capitalisation of around $986.85 million, with approximately 669.05 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended ZIPCOLTD FPO and Block, Inc. The Motley Fool Australia owns and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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