Tyro Payments (ASX:TYR) share price crashes 12% on short seller attack

The Tyro Payments Ltd (ASX:TYR) share price is crashing lower again on Friday after being attacked by a short seller…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Tyro Payments Ltd (ASX: TYR) share price came under pressure again on Friday and sank notably lower before going into a trading halt.

The payment processor's shares were down 12% to $2.32 before the halt.

This latest decline means the Tyro share price is down by almost a third since the start of 2021.

Why is the Tyro share price sinking lower?

Investors have been selling Tyro shares this month after it reported an outage with its payment terminals on 7 January.

Unfortunately, despite the apparent modernity of its technology, this outage has proven to be a much harder fix than first hoped. The company advised that the issue caused a subset of terminals to lose connectivity with Tyro's network, meaning they could neither transact nor be updated remotely.

In light of this, Tyro has been collecting, repairing, and returning impacted terminals to merchants as rapidly as possible.

That's old news, why the selloff today?

Today's selling has been caused by a short seller report by Viceroy Research. It has previously targeted the likes of WiseTech Global Ltd (ASX: WTC) and Syrah Resources Ltd (ASX: SYR).

Viceroy's note, entitled "Tyro by name, Tyro by nature," claims that the problem is far greater than the company is admitting and labeled it "the most unreliable & technologically inferior fintech in Australia."

Here's why:

Over the last week, our research suggests Tyro has "bricked" (verb: to turn into a brick)  ~50% of its terminals across the country via a software patch, which requires a recall and capital-intensive terminal repair/replacement. It has no disaster recovery plan and has left businesses, including medical facilities, without any means to collect payment from customers.

Viceroy Research believes Tyro presents a limited-risk short as customers churn in record numbers to vastly superior, non-archaic payment solutions providers, which are available in abundance, and immediately. Tyro presents no real catalyst to make a jump into profitability.

Despite being in operation since 2003 Tyro is increasingly loss making and floats its operating cash flows through customer deposits in its banking division.

We believe Tyro presents significant downside.

Tyro has requested a trading halt while it prepares a response to the allegations. 

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Fallers

A woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason today
Share Fallers

Why Clearview, NAB, Resolute Mining, and Westpac shares are dropping today

These shares are under pressure today. But why?

Read more »

A man looking at his laptop and thinking.
Bank Shares

Why is the Bendigo Bank share price tanking today?

There are a few things that could be driving this bank lower today.

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Bellevue, Domain, Skycity, and Wildcat shares are tumbling today

These shares are having a tough time on hump day. But why?

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

Why Domino's, Lynas, Paladin Energy, and St Barbara shares are sinking today

These shares are having a tough session. What's going on?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Amcor, Boss Energy, Brickworks, and Mineral Resources shares are tumbling today

These shares are starting the week in the red. But why?

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why AGL, Imugene, Star, and Woolworths shares are dropping today

These shares are dropping on Thursday. Let's see why investors are selling them.

Read more »