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The Zip Co Ltd (ASX: ZIP) share price is heading south during mid-afternoon trade on Monday.
At the time of writing, the buy now, pay later (BNPL) company’s shares are down 5.66% to 50 cents a share.
For context, the S&P/ASX 200 Financials (ASX: XFJ) sector is 0.59% lower to 5,878.7 points amid a broader sell-off today.
What dragging Zip shares down today?
While the broader market may be contributing to the Zip share price fall today, investors are digesting the latest news surrounding the company.
According to Business News Australia, Zip is shutting down its money management app Pocketbook.
This comes after the embattled company struggles with higher-than-expected bad debts along with unfavourable macroenvironmental conditions, including rising interest rates.
Acquired by Zip in 2016 for $7.5 million, Pocketbook is Australia’s largest personal finance management app with more than 800,000 users.
The software analyses and tracks spending by category and value, providing users with budgeting tools and offering better control of finances.
Zip chief product officer Travis Tyler commented:
Zip’s operating environment has changed significantly in the last few months and as a result we have adapted our strategy accordingly in order to accelerate our path to global profitability.
With this in mind, Zip has decided to close the Pocketbook app in order to reprioritise resources and focus on delivering sustainable profitability in our core ANZ market.
The closing of Pocketbook will come into effect on 5 August.
Despite an 89% increase in revenue, Zip posted a staggering loss of $172.7 million for the first half of FY22.
With total cash on hand down 19% to $266.8 million for the period, Zip is making changes to preserve its cash balance.
A number of experts are predicting the BNPL sector to fall further as tighter regulation looms in mid-2022.
As reported by The Guardian, Australian financial services minister Stephen Jones said that BNPL products would be treated the same as credit products.
Zip share price summary
Over the past 12 months, the Zip share price has plummeted almost 94%, with year-to-date performance down 88%.
It seems a long time ago that the company’s shares rocketed to an all-time high of $14.53 in February 2021.
Based on today’s price, Zip has a market capitalisation of approximately $345 million.