Zip Co Shares Slide 11% This Week as BNPL Sector Faces Renewed Pressure

The Quick Take

• Zip Co (ASX: ZIP) shed another 11% this week, extending a sustained share price decline in the buy-now-pay-later sector
• Rising interest rates continue to squeeze BNPL margins, with brokers divided on recovery timing and price targets under review
• The stock sits well below its all-time highs as sector consolidation and profitability questions persist amid softening consumer credit demand

Zip Co's latest 11% weekly decline underscores the challenging environment facing ASX-listed buy-now-pay-later operators. The share price move compounds prior losses, reflecting investor concern that the BNPL sector's peak-growth era has passed and the path to sustainable profitability remains uncertain in an elevated interest rate environment. Brokers watching the stock are reassessing near-term price targets as volume growth across the BNPL segment decelerates.

The structural pressure on Zip stems from the cost of funding: as wholesale rates remain elevated, the spread between Zip's lending rates and funding costs narrows, squeezing margins on its core consumer instalment product. Competition from major banks entering the instalment lending space adds further headwind, while consumers are reverting to traditional credit products as economic confidence softens. The combination of higher funding costs and decelerating volume growth is a challenging backdrop for a business still working toward consistent profitability.

For ASX investors, Zip's continued weakness raises questions about the near-term recovery timeline. The company has been working to improve unit economics and reduce cash burn, but the market appears unconvinced that operational improvements are happening fast enough to matter. Until the macro rate backdrop shifts materially or Zip demonstrates consistent quarterly profitability, the stock is likely to remain under pressure from both short sellers and cautious institutional holders reassessing fintech allocations.

Synthesized from 1 source.