The EarlyPay Ltd (ASX: EPY) share price has been a rollercoaster today. Initially, shares in the non-bank lender jumped on open to 50 cents, an increase of 16%. Celebrations were short-lived with the shares taking the elevator back to 44 cents.
The price movements are cause for some head-scratching, as there are no announcements. Let's take a look at what could be happening.
What might be moving the EarlyPay share price?
EarlyPay rebranding resonates with rocketeers
EarlyPay was previously known as CML Group – just doesn't have the same ring to it, does it? The recent rebranding was a part of the company's shift towards a new software-as-a-service (SaaS) operation after acquiring Skippr.
Transitioning to more of a digital-leaning lender, EarlyPay likely hopes to replicate the success of ASX-listed Wisr Ltd (ASX: WZR) in its digital endeavours. EarlyPay does differ from Wisr though, as the former provides secured finance to small and medium-sized businesses. Whereas Wisr offers loans to individuals for travel, car purchase, etc.
With the acquisition of Skippr, EarlyPay can now assess credit quality through integration with cloud accounting data automatically. Additionally, the whole onboarding process for a customer is now automated – significantly reducing the time and effort required on EarlyPay's end to facilitate a loan.
There is the potential that some are speculating over the name EarlyPay, as it sounds a little like Afterpay Ltd (ASX: APT). With the buy now, pay later (BNPL) sector heating up, everyone is hunting for new entrants. However, EarlyPay isn't quite a BNPL company – although the debate rages on whether BNPL is just glorified credit.
EarlyPay profitable growth play
Investors could also be enticed recently by the fact EarlyPay is profitable. As a consequence of the recent SaaS shift, the company may be appealing to investors less fancied with loss-making businesses.
In its October 2020 investor presentation, EarlyPay recorded $8.4 million in profits on $47.5 million revenue. Based on today's valuation, that gives EarlyPay a P/E ratio of 11.85 – which would be considered low for a technology company. But, then the debate arises, is it a technology company or just a lender?
Whatever the answer, the EarlyPay share price has had a whirlwind day. At the time of writing, EarlyPay shares are swapping hands for 44 cents, which puts it up 1.16% today and 14% for the year so far.