It was another tough week for the Zip Co Ltd (ASX: ZIP) share price.
Investors were selling down the buy now pay later provider's shares following the release of its third quarter update.
While that update revealed growth that most companies would be proud of, it still fell short of the market's expectations.
This was compounded by the worsening of credit losses and concerns over lower frequency of use and the impact that its bold cost reduction plans could have on its growth.
The Zip share price ultimately ended the week 10% lower than where it started it at a lowly $1.10. This means its shares are now down almost 75% since the start of the year.
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Is the weakness in the Zip share price a buying opportunity?
According to a note out of Citi at the end of last week, its analysts continue to sit on the fence with the Zip share price.
Although the broker acknowledges that Zip is pulling the right levers, it highlights that risks remain.
In light of this, the broker has put a neutral (high risk) rating and $2.15 price target on the company's shares.
Citi commented: "While TTV growth was slower than expected and bad debts in AU increased qoq, on balance we see the 3Q update as positive with customer growth in the US accelerating in spite of tightening of risk settings, net transaction margins improving and Zip reducing costs faster than expected. "
"While stronger-than-expected growth on the back of Enterprise merchant additions represents upside potential, we are Neutral/High Risk (2H) rated as we are concerned about the potential for bad debts to remain elevated and the impact to top line growth from cost reduction measures."
