Why has the short interest in Zip (ASX:Z1P) shares fallen in December?

The amount of short sellers targeting the stock has dropped this month.
The post Why has the short interest in Zip (ASX:Z1P) shares fallen in December? appeared first on The Motley Fool Australia. –

The short interest in Zip Co Ltd (ASX: Z1P) shares fell in early December and has remained flat since.

According to The Motley Fool Australia’s weekly breakdown of the ASX’s most shorted shares, the buy now, pay later (BNPL) company ended November with 9.4% short interest.

As of yesterday, the most recent data sees the company with a short interest of 9%.

So, what might be making short sellers slightly more bullish on the Zip share price? Let’s take a look.

Why did the short interest in Zip shares drop?

Short sellers likely had a field day on the Zip share price in November – it tumbled 20% over the course of last month.

But things seemed to be looking more favourable for Zip in early December. The dip in its short interest could have been strengthened by a positive update released earlier this month.

On 7 December, Zip announced it saw its monthly transaction volume grow to $906.5 million in November – a 52% increase of the same month of 2020. It also saw the number of transactions using its service jump 86% to 7.5 million.

However, the broader BNPL sector’s movements have been weighing heavily on the Zip share price lately. Of course, that’s fantastic news for short sellers.

The company’s stock has hit numerous new 52-week lows in December.

First, a particularly bad day for ASX tech shares saw the Zip share price tumble 10% to a new 12-month low of $4.34.

It also slumped 6% to another low of $4.05 on Friday amid news from a United States regulator.

The nation’s Consumer Financial Protection Bureau had ordered Zip, along with 4 of its popular peers, to provide it with the pros and cons of its offerings. The companies’ answers will help make up an inquiry into the BNPL industry.

All in all, those holding Zip’s 9% short interest are probably having a joyous December – the company’s share price has tumbled another 20% since the month began.

The post Why has the short interest in Zip (ASX:Z1P) shares fallen in December? appeared first on The Motley Fool Australia.

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More reading

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Here are the 3 most heavily traded ASX 200 shares this Friday

Latitude (ASX:LFS) boss warns many ASX BNPL companies “will go out of business”

BNPL whacked! Why the Afterpay (ASX:APT) share price is down 7% to a new 52-week low today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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