Is the Zip share price set to sink below the $1 mark for the first time since 2018?

Can the Zip share price get any lower? Here’s what this ASX expert reckons…

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Key points

  • Zip shares have been one of the worst-hit ASX tech companies in 2022
  • Zip has now lost more than 75% of its value in 2022 alone
  • We check whether the BNPL share could be headed for a price under $1 a share

As any investor in the Zip Co Ltd (ASX: ZIP) share price would know, it’s been a fairly dismal year. Even though we’re still only in April, 2022 has so far seen Zip shares lose more than 75% of their value. If we stretch that period to February 2021, Zip is now down more than 91%.

But the losses have unfortunately accelerated today. At the time of writing, the Zip share price has lost another 1.36% and is now sitting at $1.085 a share. This comes after the buy now, pay later (BNPL) company hit a new 52-week low of just $1.04 a share earlier this morning. These latest falls follow Zip releasing its less-than-well received third-quarter update last week.

So given Zip’s recent share price trajectory, it might not be unreasonable to assume that the ASX’s largest BNPL share could have a share price under $1 in the near future. If that did happen, it would be the first time since late 2018 that Zip was priced at such a level.

So could that be what’s in store for Zip?

Zip shares: Future penny stock or buy today?

Well, anything’s possible, of course. But one ASX investing expert reckons Zip could have brighter days in front of it. As my Fool colleague James covered at the time, analysts at broker Citi reckon Zip shares could well go higher from here.

Citi currently has a neutral (high risk) rating on Zip shares. But the broker has also rated the company with a 12-month share price target of $2.15. That would be more than double the current share price.

Here’s some of what the broker said on Zip:

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.

So no doubt investors will be hoping that a $2.15 share price becomes a reality for Zip over the next year. But we shall have to wait and see if this ASX BNPL share can turn its fortunes around.

Motley Fool contributor Sebastian Bowen 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. The Motley Fool Australia has no position in any of the stocks mentioned. 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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