Shares of Zip Co Ltd (ZIP.AU), the Australian buy now, pay later provider, experienced a significant drop during Tuesday's trading session, plummeting 8.13% in intraday trading. This sharp decline comes on the heels of a challenging day for the tech sector and potential profit-taking by investors.

The selloff in Zip Co shares appears to be driven by multiple factors. Firstly, the weakness in the tech sector, following a poor performance on the Nasdaq index overnight, has created a ripple effect on ASX-listed tech stocks. As a fintech company, Zip Co is particularly susceptible to these sector-wide movements.

Additionally, market analysts suggest that profit-taking could be contributing to the decline. Despite today's sharp drop, Zip Co's shares remain up approximately 5% compared to last week, indicating that some investors may be capitalizing on the recent gains following the company's third-quarter update release last week. The positive reception of the quarterly report had previously driven the stock higher, but today's movement suggests a correction in investor sentiment.

This volatile movement underscores the current challenges facing the buy now, pay later sector and the broader tech industry. Investors will be closely watching Zip Co's performance in the coming days to determine if this is a temporary setback or the beginning of a more prolonged downturn for the company's stock.