The Zip Co Ltd (ASX: ZIP) share price is in the red today, down 9.78% at the time of writing. The sell-off in Zip shares comes amid a string of bad news for the company over the last week.
Shares of the ASX buy now pay later (BNPL) company currently trade for 81.2 cents each. They closed trading on Friday at 90 cents each.
It's not only the Zip share price that's been hit today. The S&P/ASX 200 Financials Index (ASX: XFJ), which Zip is a part of, is also not doing too good this afternoon. It's down by 2.18%.
Zooming out further, the broader market is also struggling today with the S&P/ASX 200 Index (ASX: XJO) 1.98% lower in late afternoon trading.
Let's recap what's been challenging the Zip share price over the last week.
What's going on with the Zip share price?
The black cloud of bad news last week seems to be following the company into the next. On Thursday, investors reeled amid news that Zip posted a $1 billion loss for FY22. The loss equated to roughly 165% of the company's market cap at the time. Shares unexpectedly rallied to 94 cents apiece when the loss was posted but have since entered a sharp sell-off amid recent developments.
On Friday, UBS broker analyst Tom Beadle posted a note stating the Zip share price was trading at a premium two times higher than what it should be worth, giving it a 45-cent price target. That's a 45% expected downside at the time of writing.
Beadle said (as quoted by The Australian):
In FY23, managing cash burn and demonstrating a clear path to profitability will be crucial for Zip. Whilst Zip have announced a range of initiatives designed to reduce cash burn, quantifying their precise impact remains difficult; in our view material uncertainty remains.
And today, my Foolish colleague James Mickleboro reported that short sellers are actively targeting Zip shares in expectation of further losses, noting that short interest has risen 8.4% week on week.
Zip share price snapshot
The Zip share price is down 81% year to date.
Both the S&P/ASX 200 Financials Index (ASX: XFJ) and the S&P/ASX 200 Index (ASX: XJO) are far outperforming the BNPL share. They're down 8.32% and 8.23%, respectively.
Zip's market capitalisation is roughly $567 million
