Rear Window
Professional investors who tipped into Zip Co’s $148.7 million capital raising at $1.90 per share in March 2022 are now down $86.8 million, or 58.4 per cent, over a horror three-month run for the broader buy now, pay later sector.
Australian share trading platform Superhero’s logo displayed in Times Square, New York. The company partnered with the Nasdaq to supply it with market data as it launched US share trading. Sippakorn Ponpayong
On Friday Zip shares closed at just 79¢. They have now cratered 94.5 per cent since somebody paid a record price of $14.53 for shares in February 2021.
But it is not just the “smart money” that has been burnt by Zip. The fintech lender has also been a huge favourite among pandemic-era retail investors who entered the stockmarket armed with cheap brokerage apps and new emoji-based investing strategies.
Zip was the most traded stock by retail investors on budget mobile trading app Superhero in 2021.
Unfortunately, saving some cash on brokerage won’t ease the pain for a posse of retail investors that made one of the worst performing stocks in memory the most popular to buy and then sell on a sexy new trading app.
As the stock’s implosion accelerated through 2022, retail investors actually got offered last March’s capital raising at a $1.48 per share, on a 22 per cent discount to what the professionals paid at $1.90.
But with shares at 79¢ today everybody’s underwater and the retail bag holders are nursing paper losses around $11 million from the $24 million cash they paid for more Zip shares.
In just a few months total paper losses on the raising are close to $100 million on the $172.7 million raised. The latter amount is only just enough to cover the $148.3 million in bad debts Zip wracked up over the six months to the end of 2021.
That fact goes a long way to explaining why Zip shares can’t catch a bid like they used to and why some Gen Z investors are facing painful financial lessons.
Follow the topics, people and companies that matter to you.
Fetching latest articles
The Daily Habit of Successful People