The Zip Co Ltd (ASX: ZIP) share price had a horror month in June.
Unfortunately, this won’t mark the first month of steep losses for long-term shareholders who’ve watched the stock plummet 97% from its February 2021 highs.
After a relatively strong month in May, the Zip share price crashed a precipitous 24.1% in June.
For some context, the All Ordinaries Index (ASX: XAO) gained 1.8% over the month.
Shares in the ASX buy now, pay later (BNPL) stock closed May trading for 57.5 cents apiece. At the closing bell on 30 June, shares were changing hands for 41 cents each.
So why another horror month?
What happened with the Zip share price in June?
On the surface, there wasn’t any fresh dire news hitting the market that would send investors scurrying to hit the sell button.
In fact, there were some early gains on 9 June after the stock came out of its trading halt to announce the results of its equity raising.
Zip reported on the day that it had successfully conducted a $24.7 million equity placement. The BNPL company issued 52.5 million new shares at 47 cents apiece.
Despite reporting the placement had received strong interest from institutional investors, the Zip share price closed flat on the day. Shares then closed lower (or flat) for the next 10 consecutive trading days.
That may be because investors remain concerned over the company’s planned return to profitability. Not to mention its longer-term survival prospects, faced with stiff competition from companies with much deeper pockets.
If I owned shares (I don’t), I’d also be concerned about the ongoing pressure on the Zip share price due to persistently high inflation and still rising interest rates.
As the cost of living pressures continue to mount on consumers, it could hit Zip in two ways.
First, the company could see a marked increase in bad debts.
Second, consumers may tighten their belts and restrict spending to the essentials. Even the lure of not having to pay for their items at the time of purchase may not be enough to keep Zip transactions from falling if the globe slips into a recession.
With that said, July is off to a much better start.
Halfway through the second trading day of the month, the Zip share price is up 7.3% in July.
