It's been a decent start to the trading week for ASX 200 shares and the S&P/ASX 200 Index (ASX: XJO) so far this Monday. At the time of writing, the ASX 200 has gained a tentative 0.2% at just over 6,840 points. But we can't say the same for the Zip Co Ltd (ASX: ZIP) share price.
Buy now, pay later (BNPL) share Zip has tanked today. The Zip share price is presently down by a chunky 1.16% at 86 cents a share. There's been no company news out of Zip itself today. But we don't have to look too far to see why investors might be losing faith in the BNPL company.
As we covered this morning, Zip has just found out that, come 19 September, its shares will no longer be part of the ASX 200 Index.
Zip share price gets the ASX 200 boot
The ASX 200, like most indexes, periodically rebalances to ensure it can effectively enforce its mandate of holding the largest 200 ASX shares by market capitalisation. There are other requirements, but we'll stick with that one for simplicity's sake.
Since any company's market cap (read share price) changes daily, the largest 200 companies on the ASX boards are in constant flux. The ASX 200 Index's provider, S&P Global, deals with this problem by updating its indexes, including the ASX 200, every quarter.
This ensures that the better-performing companies on the market are added to the ASX 200 over time. To make room, the poor performers are removed. Unfortunately for Zip, it now falls into that latter category.
The reality is that Zip is no longer one of the ASX's 200 largest shares by market cap. Investors can probably thank the painful 88% that Zip shares have lost over just the past 12 months.
As such, it is now forced to make way for other ASX shares that have overtaken it by market cap.
Zip joins other shares like Life360 Inc (ASX: 360), AVZ Minerals Ltd (ASX: AVZ), EML Payments Ltd (ASX: EML) and City Chic Collective Ltd (ASX: CCX). These shares are all set for removal from the ASX 200.
In their place, shares like Lovisa Holdings Ltd (ASX: LOV), Sayona Mining Ltd (ASX: SYA) and Karoon Energy Ltd (ASX: KAR) will be joining the ASX 200 as of 19 September.
At the current Zip Co share price, this ASX BNPL share has a market capitalisation of $595.1 million.
