We are looking to open a small position in Tyro Payments (TYR).
TYR is an Australian-based fintech company providing Small to Medium Enterprises (SMEs) with payment solutions and banking products. You may have been tapping on a Tyro payments terminal if you have recently used your card to tap and go at a café, restaurant, pub, or bar. TYR charges a merchant fee on every transaction processed.
This idea is more of a trading opportunity than an investment with a good growth story and a strong technical chart. That said, we will not mention the company’s financials. But like a lot of similar companies, they are loss-making and are unlikely to be profitable for a few more years.
The TYR chart has a similar trajectory to many fintech companies listed on the market in that its share price has fallen drastically since its peak in November 2021, around $4.00 to close at $1.02 yesterday.
There are a few specific issues that have caused the share price to fall
- Fall out from outages that meant retails were unable to process transactions due to technical issues
- The CEO/MD Robbie Cook jumped ship and went to Star City for a sign-on bonus. The skeptic in me thinks he might have jumped ship because he had no chance of reaching hurdles that would have allowed the 5.5m executive option to be converted into shares.
- Competition – The big four banks are the competition in the payment process sector, and they have deep pockets.
Yesterday’s trading action in the company’s shares was interesting. First, the company share price was falling like many tech shares yesterday. Then at 12:08 pm, an unusually large block trade occurred, and the share price rallied sharply. When the block trade was complete, the share price was down 3.7%. Just before the close of trade, the share price was trading at $1.05 and was up 12.2%.
This block trade piqued our interest for a few reasons
1. The number of shares purchased is just under the 5% threshold at which a buyer must disclose his shareholding to the market. The buy could well have been a strategic buyer building a position in the company before launching a takeover.
2. It is clear from the recent price action that there has been an overhang of sellers in this stock. The odd number of shares that changed hands may have signalled a big seller offloading the last of his position. With the overhang of sellers removed, the share price might be about to rally.
There is one short-term risk on the horizon, and this is the company’s next earnings date which is coming up next week on the 25TH August. We would typically avoid opening a position with the earning risk, but we feel opening a small position is worth the risk.
TRADE ACTION
Number of shares: 2,000
Entry: Buy up to $1.10
Stop loss: $0.80
Target Price : No target