Why the Zip (ASX:Z1P) share price is down almost 25% this month

The Zip Co Ltd (ASX: Z1P) share price has erased some serious gains over the past monht. We take a closer look at what is dragging the company's shares lower.

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Its been a turbulent month for the Zip Co Ltd (ASX: Z1P) share price, shedding close to 25% in just a month. This comes despite the company reporting a strong result for Q3 FY21 while surging ahead with its expansion strategy.

At the time of writing, the buy-now, pay-later (BNPL) company's shares are fetching for $7.03, up 2.9% for the day.

illustration of laptop with down arrow and the word zip representing zip share price going down.

Image source: Getty Images

What's happened to the Zip share price?

It's been a hard pill to swallow for investors, seeing their Zip holdings plummet in value.

The company reported outstanding figures across its global operating markets for the third quarter. However, as is the yearly tradition in May, an ASX market slump has continued the Zip share price onslaught.

Interestingly, just before the company's shares fell further, Zip co-founders, Larry Diamond and Peter Gray sold some of their holdings. The news did not appease investors concerns, with 1.5 million and 500,000 shares sold by the co-founders on 15 April, respectively. The off-market trade price that sold of those shares, went for $9.18 a pop, a far cry from its current share price.

In further news, just 2 weeks after, both co-founders were issued almost 40,000 shares between each other for a price of $8.32. While it may be insignificant in the scheme of things, the allocation was ill-timed, with inventors dumping Zip shares from that day forward.

With no new news out of the company in the past 30 days, investors will no doubt be keeping a close eye on any updates.

Zip is projected to release their preliminary final report for FY21 in late August.

Foolish takeaway

Adding on today's gain, the Zip share price has accelerated close to 130% when looking at the past 12 months. The company's shares reached an all-time high of $14.53 after reporting its half-year results. However, severe profit taking swopped in dragging Zip shares lower over the following month.

Based on today's prices, Zip commands a market capitalisation of around $3.9 billion, with approximately 554 million shares outstanding.

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of 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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