Tyro Shares Crumple as Market Tests Investor Resolve (ASX:TYR)

It’s been a savage day of trading for Tyro Payments Ltd [ASX:TYR].

At time of writing the TYR share price is down 12.11% and still falling. One of the worst performers out of a handful of fintech stocks getting hammered today.

Which begs the question, is it time for investors to get out while they still can?

Down, but not out

The Tyro sell-off today can be largely blamed on market sentiment more than anything.

Pessimism has gripped the ASX and sent most stocks tumbling. A consequence of the worrying outlook of a slower than expected economic recovery, as well as a resurgence of COVID-19.

However, it is not as if Tyro doesn’t have its own concerns.

The company has taken a bold, albeit strange reporting strategy since the pandemic began.

Every week they provide an update on their total transaction value. Giving the market a gauge of how their business is travelling far more transparently than most.

It is certainly an admirable way to go about things. Giving investors and the market a proper insight into just how much impact this pandemic has had.

Trouble is, the truth can hurt too.

For the month of April, Tyro saw a 38% reduction in transaction value year-on-year. Followed by an 18% drop in the month of May too.

They were two very harsh months for the company. But things have started to pick up again.

For June (up to the 12th), Tyro’s transactions are back in the black. Up a modest 6% compared to the same time period last year. And overall, their year-to-date total is still up 16% compared to last year too.

Suffice to say, today’s pullback seems like a shakeout of weak hands more than anything. In the grand scheme of things, this is a stock that has made an impressive recovery since the March lows.

However, the fintech sector has attracted a significant amount of attention lately. That’s why we’re not surprised by the extreme volatility we’re now seeing.

I wouldn’t count out Tyro just yet, but they’re part of a group of stocks that are flying very high right now. A consideration that any investor should keep in mind before committing their cash.

Looking ahead

Broadly speaking, Tyro and its ilk are highly divisive stocks.

They’re either hailed as the next big thing in finance or ridiculed for being the next tech bubble. You can certainly make a case for either outcome.

Right now though, broadly speaking, you’d have to give the edge to the optimists.

With the banks struggling, the opportunity for a fintech revolution is looking likely. These new, digital firms could become the new face of finance.

At least, they certainly hope to be.

Whether or not Tyro will be one of those lucky few remains to be seen. They’ve still got a long road ahead of them, and a lot of stiff competition.

We’ve even prepared a report on three fintech stocks that we like better than Tyro. Companies that are much smaller but are also brimming with more potential. Read all about these stocks, and the potential for a fintech revolution, right here.


Ryan Clarkson-Ledward,
For Money Morning


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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