The Zip Co Ltd (ASX: ZIP) share price has tumbled 58% since the company delivered its half-year results to the market.
The ASX buy now, pay later (BNPL) provider has been through a challenging year impacted by unfavourable market conditions. This includes potential regulatory headwinds and rising bad debts due to strong inflationary movements.
At Tuesday's market close, Zip shares finished 6.12% lower at 92 cents.
Below, we take a closer look to see if investors can learn anything from the company's last earnings season.
What happened in the first half of FY 2022?
Investors weren't able to trade Zip shares on 28 February as the company requested a trading halt following its half-year results.
Zip explained that it signed an agreement to acquire rival BNPL provider Sezzle Inc (ASX: SZL) for approximately $491 million.
In addition, Zip undertook a $198.7 million capital raise to "support its growth and execute on the potential synergies from the transaction".
The trading halt came in a timely manner as the company reported widening losses on the bottom line, despite operating income almost doubling.
Zip co-founder and global CEO Larry Diamond said:
We acknowledge there has been a shift in the external environment, arguably quicker and more severe than first forecasted. Accordingly, we have refined our strategy with a focus on sustainable growth in our core markets, maintaining strong unit economics – particularly credit performance, broader cost management, right-sizing our internal footprint, which accelerates our path to profitability.
Once the trading halt was lifted on 1 March, investors began to offload Zip shares.
In fact, from 28 February to 15 March, the Zip share price tanked 36% to a 52-week low, before taking a slight breather.
Eventually, Zip shares hit a multi-year low of 43.5 cents in late June on the back of extreme volatility on the ASX.
There has been a small rebound in the past couple of months. But whether the Zip share price can regain its previous highs depends on the company's upcoming results.
No doubt, investors will be eagerly waiting for the release of Zip's full-year results on Thursday.
Zip share price snapshot
As pressure mounts on the BNPL industry, the Zip share price has not been immune – falling almost 90% over the past 12 months.
This means its shares would need to climb 900% to break even from this time last year.
Based on the current price, Zip presides a market capitalisation of around $633 million.
