Shares of ASX newcomer, Tyro Payments Ltd [ASX:TYR], are up significantly on their indicative IPO price of between $2.50–2.75, trading at $3.51 at time of writing.
You can see how the first hour of trading went for the Tyro share price below:
We look at what Tyro’s competitive advantage is after its IPO. Despite expecting a fourth consecutive annual loss next year, their success may hinge on their ability to become a neo-lender.
Tyro share price up significantly in first hour
As you can see, the Tyro share price was quick out of the blocks once trading commenced at midday.
Clearly, investors were pretty enthused about the company.
But what does the future hold for Tyro?
Tyro’s success may hinge on their ability to convert EFTPOS buyers into business loans
Some key facts about Tyro:
- Australia’s largest EFTPOS provider
- 29,000 businesses on the books
- $17.5 billion in transactions in 2019, generating $189.8 million in revenue
- Morgan Stanley valued the company at between $1.5 and $2.1 billion in October
- IPO values Tyro at a market cap of $1.25–1.36 billion
- 450 employees
In addition to their EFTPOS products, they offer e-commerce solutions, bank accounts, and business loans.
So despite their initial appearance as an Aussie Square Inc [NYSE:SQ] clone, these last two strike me as where the real growth in Tyro’s business could come from.
That is, its ability to capitalise on the 29,000 businesses it already has sales interactions with.
Tyro may well morph into a neo-bank and a neo-lender down the track.
This could prove to be Tyro’s competitive advantage.
And its ability to transform may also impact some blue chip ASX companies — bank stocks in particular.
For instance, National Australia Bank Ltd [ASX:NAB] has an edge in the business loan market with a 21% market share.
This is one of the few aspects of its business that is going well at the moment.
But make no mistake, the first signs of the collapse of the Big Four empire are starting to show.
And it is possible that companies like Tyro will accelerate this process.
We take a look at three of the most exciting fintechs in this free report, one of the picks is up 53.57% in a 12-month window.
For Money Morning
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