It was a day to forget for the Zip share price…
The post The Zip (ASX:Z1P) share price just had its worst day since 17 February. Here’s why appeared first on The Motley Fool Australia. –
The buy now pay later (BNPL) provider’s shares ended the day over 11% lower at $7.32.
This was the worst daily performance by the Zip share price since 17 February.
Why did the Zip share price sink?
Investors were heading to the exits in a hurry yesterday amid reports that tech behemoth Apple is planning to enter the BNPL market.
While Apple has declined to comment on the speculation, Bloomberg has reportedly spoken with people involved in the development of the product. It understands that the service will be have similarities to the offerings of both Afterpay Ltd (ASX: APT) and Zip.
Apple Pay Later is expected to allow consumers to buy items in store and online with an interest-free Apple Pay in 4 option and a longer-term option with interest called Apple Pay Monthly Instalments.
Why enter BNPL?
The report explains that Apple is interested in entering the BNPL market to help increase Apple Pay adoption. As Apple takes a cut from transactions made with Apple Pay, increased use would be a boost to its US$50 billion per year services business.
It wasn’t just the Zip share price sinking on Wednesday. Given that this news has potential ramifications for the whole industry, it will come as no surprise to learn that Affirm, Afterpay, and Sezzle Inc (ASX: SZL) shares also tumbled significantly lower.
Also weighing on the Zip share price yesterday was news that PayPal is removing late fees for its BNPL service. While nowhere near as unexpected as Apple’s news, it highlights just how competitive the landscape is getting in the lucrative market.
One positive, though, is that despite yesterday’s decline, the Zip share price is still up 31% year to date.
Should you invest $1,000 in Zip right now?
Before you consider Zip, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Zip wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.