Why the Smartpay (ASX:SMP) share price is up 30% in 2021

The Smartpay Holdings Ltd (ASX: SMP) share price may be down today, but it's also up 30% in 2021 so far. Here are 2 reasons why

The Smartpay Holdings Ltd (ASX: SMP) share price is not having a great day today. At the time of writing, Smartpay shares are down 1.14% to 87 cents a share.

On the surface, that move doesn't look great for Smartpay shares. But if we zoom out, the picture gets a whole lot rosier. Smartpay shares are still up almost 30% year to date. They are also up more than 97% over the past 12 months. And with a 52-week range of 28-98 cents per share, Smartpay is definitely still in the upper echelons of this range. 

So what has gone so well for this payments company over the past 3-and-a-half months?

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Smartpay share price pays off

Well, there hasn't been too much to talk about with Smartpay in recent months. We haven't had any meaningful announcements of consequence for the company since 12 March. And that was a notice from S&P Global that Smartpay would be joining the S&P/ASX All Technology Index (ASX: XTX), effective 22 March. This does have the potential to be a growth catalyst for the Smartpay share price, seeing as ASX tech shares are an area that is attracting more and more attention these days. The ASX exchange-traded fund (ETF) that tracks the XTX Index – the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) – is an increasingly popular ETF that now has more than $200 million in net assets. It has also appreciated more than 83% over the past 12 months, which doesn't hurt either.

Remember, part of every dollar that gets invested with this ETF goes into Smartpay shares. So that's certainly a tailwind for the Smartpay share price.

But we could still be seeing the aftershocks of a very well-received quarterly trading update that the company released back in January. As we reported at the time, this trading update saw the Smartpay share price reach its current 52-week (and all-time) high soon after. 

And for good reason. The update told investors that revenues were up 18% quarter-on-quarter and 24% over the prior corresponding quarter to NZ$9.2 million. Perhaps most impressively, Australian revenues grew 35% over the previous quarter's numbers, and 75% against the prior corresponding quarter. 

Those are objectively strong numbers and have almost certainly done the lion's share of the legwork when it comes to the Smartpay shares' 2021 performance thus far. 

Those factors are likely to be behind the Smartpay share price's 28% gain in 2021 so far. At the current share price, Smartpay has a market capitalisation of $204.25 million.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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