The carnage continues: Why the Zip share price has hit 7 multi-year lows in a month

The Zip share price can't seem to catch a break.

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A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash

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Key points

  • Zip shares touched another multi-year low of 79 cents yesterday 
  • The BNPL company's shares have hit seven multi-year lows in the past month alone
  • Weak investor sentiment due to macroeconomic factors are playing a significant hand

The Zip Co Ltd (ASX: Z1P) share price hit a fresh multi-year low of 79 cents yesterday.

The buy now, pay later (BNPL) company's shares continue to be volatile, with investors probably questioning where the bottom is.

Unfortunately, not even legendary investor Warren Buffett can accurately predict where falling shares will stop.

Over the past month alone, the Zip share price has hit seven multi-year lows.

At Thursday's market close, Zip shares finished at 80 cents, down 4.79%.

What's dragging Zip shares down?

Investors have continued to sell off Zip shares due to negative sentiment across the financial industry.

The word "recession" has been a major talking point for economists in recent times following debates on whether or not one is around the corner. This is being driven by high inflation, a tightening monetary policy, and concerns about a global economic slowdown.

The S&P/ASX 200 Financials (ASX: XFJ) sector ended yesterday in the red, down 1.21% to 6,545 points. When looking at the past month, the index is down 2.4%.

Consumer confidence is being weighed down as the United States experiences the biggest rise in consumer prices in 40 years.

Australian consumer prices have surged at the fastest annual pace in 20 years.

The Reserve Bank of Australia updated its statistics to show inflation climbed by 5.1% in the March quarter.

Key contributors included record fuel prices, and the rising costs of construction due to high demand but low supply of building materials and labour.

However, in an effort to slow down the rising price of goods, the RBA has intervened.

Last month, Australia's central bank decided to lift its official cash rate to 0.35%, the first rise since 2010.

In essence, this means that consumers are less likely to spend money on discretionary items when interest rates are picking up and increasing the cost of their debt.

We will have to wait until next Tuesday to see if the RBA will again increase interest rates.

Zip share price summary

It has been a whirlwind 18 months for Zip investors.

The company's shares rocketed to an all-time high of $14.53 in February 2021 but have plummeted ever since.

In the past 12 months, the Zip share price has fallen by almost 90%. This means it would need to increase nine-fold to break even.

Based on today's price, Zip presides a market capitalisation of approximately $574 million.

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. has no position in any of the stocks mentioned. 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 Scott Phillips.

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