It's been a topsy-turvy 12 months for shareholders of ASX tech company and neobank Tyro Payments Ltd (ASX: TYR). After a surprisingly swift recovery from the COVID-sparked market crash last March, Tyro shares bounced around a bit over the latter half of 2020 before plunging to a new 52-week low of $2.31 in mid-January.
Since then they have rallied again, storming back up to $3.60 as at Wednesday's close. Despite their mid-January blip, this still puts Tyro shares up over 10% year to date.
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Company background
Before investigating the drivers behind the share price volatility, it's worth taking a look at what Tyro actually does.
Tyro supplies EFTPOS payment terminals to small businesses. In fact, outside of the big four banks, Tyro is the largest supplier of EFTPOS terminals in Australia. The company also provides merchant banking services and develops software to help its clients manage their business banking needs.
Tyro also provides business lending options, and its platform is fully integrated with accounting software developed by fellow fintech Xero Limited (ASX: XRO).
What has driven the Tyro share price volatility?
The January share price collapse was triggered by news the company's EFTPOS terminals had suffered connectivity issues. This was followed by a short-seller report by Viceroy Research which alleged (among other things) the outage was caused by a faulty software patch that would cost Tyro $12 million to repair.
Tyro put its shares into a trading halt in order to respond to the various allegations made in the Viceroy report – most of which the company claimed were false or misleading. But it wasn't enough to stop the bloodletting – Tyro shares shed close to 30% of their value in around a week.
More recent news
Tyro has been releasing weekly business updates in response to the ongoing COVID-19 pandemic. In the company's most recent announcement, covering the week ended 23 April 2021, Tyro reported an 18% rise in total transaction value versus the prior comparative period. As of 23 April 2021, Tyro had processed over $20 billion worth of payments for the fiscal year to date, versus slightly under $17 billion for the same period in FY20.
Where to next for the Tyro share price?
So far, Tyro has done well to shrug off the January short-seller report and keep its share price climbing higher this year. Despite all the recent volatility, as well as the business headwinds created by the COVID-19 pandemic, Tyro shares have now increased around 30% over the last 12 months.
The company has the added benefit of being tied up closely with the post-pandemic economic recovery. As customer foot traffic returns to retailers, restaurants and other small businesses, transaction volumes could continue to grow. However, the obvious flip side to this is that another major coronavirus outbreak and any associated lockdowns could drive more volatility in the Tyro share price.
Despite the risks, Tyro sees itself as an exciting disruptor looking to take some market share away from the major banks. Along with a new generation of other breakthrough ASX tech companies like Xero, Megaport Ltd (ASX: MP1) and Bigtincan Holdings Ltd (ASX: BTH), it will be interesting to see how the Tyro share price performs over the next twelve months.
