Zip Co Ltd (ASX: ZIP) shares have bounced from red to green today amid the latest cost-cutting news from the ASX buy now, pay later (BNPL) stock.
At the time of writing, Zip shares are up 1.2% at 41.5 cents apiece.
Still, that leaves the stock down more than 25% in 2023 so far.
With the company continuing to struggle its way back towards sustained profitability, more cost-cutting measures are reportedly being rolled out.
What are the latest cost cuts intended to boost Zip shares?
According to sources quoted by The Australian, Zip has sacked as much as 20% of its workforce. With the company employing some 1,500 people, that means around 300 workers may have lost their jobs.
While that’s undoubtedly unwelcome news to many of the workers, it could offer a longer-term boost to Zip shares.
The company stated that it’s “always adjusting our structure and cost base to ensure we deliver our priorities”.
In an announcement detailing the strengthening of Zip’s balance sheet in June, management noted ongoing efforts for the “simplification of business to core products and markets and streamlining of organisational structure”.
In another major move to strengthen the balance sheet, June also saw the BNPL stock raise $24.7 million, issuing 52.5 million Zip shares at 47 cents apiece.
Zip co-founder Peter Gray labelled the capital raising “the first leg of our liability management exercise”.
Gray said that along with Zip’s Consent Solicitation process, “This exercise will reduce our corporate debt by $192.2 million, further strengthening the balance sheet and positioning the Company for our next phase of growth.”
As of the end of March, Zip had 7.2 million active customer numbers.
How has the ASX BNPL stock performed longer-term?
Zip shares were smoking hot in the 12 months following the outbreak of the global pandemic in early 2020 when interest rates were being cut close to zero.
The stock closed at $12.35 a share on 19 February 2021. Since then shares are down a painful 97%.
