It certainly was a month to forget for the Zip Co Ltd (ASX: ZIP) share price in June.
Over the 30 days, the ASX buy now, pay later (BNPL) provider’s shares lost a massive 52% of their value.
This made the Zip share price the worst performer on the ASX 200 index last month.
It also means the company’s shares are were 90% since the start of the year.
Why did the Zip share price crash in June?
The Zip share price came under significant selling pressure last month for a number of reasons.
One of those came early in the month when tech giant Apple announced the launch of its BNPL service.
Apple’s BNPL service works with any merchant that already supports Apple Pay and does not require a new payments terminal. Furthermore, consumers can use the service even if the merchant doesn’t actively offer BNPL.
In addition to this increasing competition, the Zip share price came under pressure amid broad weakness in the tech sector last month. This saw the S&P ASX All Technology Index (ASX: XTX) lose more than 10% of its value during the period.
This weakness was caused by concerns over rising rates, which has led to a derating of growth stocks, recession fears, and the tough consumer environment. Investors appear to believe that these are the ingredients for a spike in bad debts.
Though, it is worth noting that Zip put out a business update last month which stated that its underlying business remains strong, with growth in customer numbers and transaction volumes. Management also stressed that it was focusing on driving its credit losses below the 2% threshold of total transaction volumes (TTV).
However, this was not enough to keep many investors on board, as you can see from the abject performance by the Zip share price. The remaining shareholders will no doubt be hoping for better in July.