The Zip Co Ltd (ASX: ZIP) share price enjoyed a strong run in May.
Shares in the ASX buy now, pay later (BNPL) stock closed last month up 5.9%. That's quite good when you consider the All Ordinaries Index (ASX: XAO) lost 3% in May.
But June hasn't gotten off to the best of starts for the BNPL company.
After just five trading days this month, the Zip share price is already down 6.5% since the closing bell on 31 May.
Yesterday, Zip shares closed even at 50.5 cents apiece. That leaves Friday as the only day so far in June that Zip has finished higher, gaining 1% on the day.
Can the ASX BNPL stock repeat its May performance?
For the Zip share price to roughly match its 6% gains in May, the BNPL stock will need to finish the month trading for 58 cents a share. (The stock ended May at 54 cents per share.)
That's about 15% above the current price.
Can that happen?
Anything's possible.
But in my opinion, it's not very likely.
To get some insight into what could help drive the Zip share price higher – or pull it lower – I'll defer to two of my Foolish colleagues.
Monica O'Shea recently offered some bullish perspectives for the ASX BNPL stock.
Among the positives, she pointed to Zip's growth plans in the United States market. Consumer spending increased by 0.8% in the US in April, exceeding consensus expectations.
O'Shea also noted the regulatory changes applying to BNPL companies that were announced in May. These will see Zip and its peers subject to the same regulations as credit card companies.
How could this help the Zip share price in June?
As O'Shea points out, "Unlike some other BNPL players, Zip already holds a credit license and conducts affordability checks on its customers."
However, Motley Fool analyst Mitch Lawler doesn't expect any sustained outperformance from the Zip share price.
Chief among Lawler's concerns is the ongoing cash outflows.
"The capital intensity of extending credit to its customers … strains the company's cash flow," he said.
"If not controlled, continued cash outflows would most likely lead to further shareholder dilution through additional capital raises," Lawler added.
When the BNPL stock issues new shares to access additional capital, it tends to see the Zip share price fall.
Indeed, in 2015, Zip had approximately 157 million shares on issue. That now stands at just under 769 million shares.
Zip share price snapshot
Despite a solid uptick in May, the Zip share price remains down 10% so far in 2023.
Over the past 12 months, the ASX BNPL stock is down 21%.
