Zip share price tumbles 5% to another multi-year low

The ASX tech sector is under pressure this morning.

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A woman putting her hands to her head grimaces and screams as the Zip share price plunges again

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Key points

  • The Zip share price has fallen to another multi-year low this morning 
  • The ASX tech sector is under intense selling pressure following Wall Street's lead overnight 
  • New US inflation figures announced overnight were higher than expected 

The Zip Co Ltd (ASX: ZIP) share price crashed to a near four-year low this morning as the ASX tech sector came under intense selling pressure.

The S&P/ASX All Technology Index (ASX: XTX) shed almost 6% shortly after the open following a poor lead from its US counterparts. This makes the tech sector the worst performer so far today.

Inflation fears pressuring the Zip share price

The higher-than-expected inflation reading from the world’s largest economy is stoking the fires of fear. Overnight it was revealed that US inflation is currently at 8.3%, which remains close to the 40-year high of 8.5% recorded in March. Investors are worried that the US Federal Reserve will have to aggressively raise interest rates to cool rising prices.

Higher rates are bad news for risk assets, particularly growth shares which typically trade at a premium with little to no profits.

Given how globalised markets are, rising US rates could also put more pressure on the Reserve Bank of Australia to lift rates here.

More bad news

Little wonder the Zip share price has lost a further 5% to hit 95.5 cents at the time of writing. It was only two days ago that the buy now, pay later (BNPL) share crashed under $1 due to much to the same headwinds.

But there could be more bad news for long-suffering Zip shareholders. Charities and consumer groups are calling for tighter regulation on the BNPL sector – no matter who wins government this month.

The surging cost of living is pushing more vulnerable consumers to use BNPL services to pay for daily essentials, according to these groups.

How the Zip share price is performing

Zip isn’t the only ASX tech share feeling the pain from the wider tech sell-off this morning. Shortly after open, the Block Inc (ASX: SQ2) share price crashed 15.8% to a new 52-week low of $102. The Splitit Ltd (ASX: SPT) share price lost 7.1% to 26 cents and Humm Group Ltd (ASX: HUM) shed 2.7% to 72 cents.

However, over the past year, the Zip share price has been the laggard within the group. Zip shares have collapsed 85%. The Block share price is down 41% and the Splitit share price has lost 60%. The Humm share price is faring better with a more modest 17% decline.

Motley Fool contributor Brendon Lau has positions in Block, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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 Scott Phillips.

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