One of the benefits of being small in relative terms is that the potential share price upside can be large.

Let's see who the brokers like.

Beforepay Group Ltd (ASX: B4P)

Shaw and Partners has issued a new research note on Beforepay with a bullish share price target, based on their estimate that the company will be able to grow its earnings per share by 164% this financial year.

Beforepay allows people to get advances on their pay, as well as offering small personal loans.

The company recently reported net profit of $15.7 million, up 57%, and "rapid" growth in personal loans.

Total cash advances were up 19% on the previous year to $963 million, mainly driven by an increase in the size of advances to an average of $456.

The company's personal loans business grew by 728% during the year to $16.9 million.

Beforepay Chief Executive Officer Jamie Twiss said:

FY26 was an outstanding year for Beforepay, delivering record Cash NPAT of $15.7 million, up 57%, while continuing to grow strongly across the business. We're particularly excited by the rapid growth of Personal Loans, which scaled significantly during the year, and the opportunities ahead as we realise the benefits of interest on Pay Advances and our new, lower-cost debt facility. We enter FY27 with real momentum and are incredibly excited about the next phase of Beforepay's growth.

Shaw and Partners said Beforepay was currently trading at a steep discount to its peers in the small-cap financial sector.

The broker has a price target of $2.90 on Beforepay shares compared to $1.80 currently.

Credit Clear Ltd (ASX: CCR)

Broker Morgans said Credit Clear's recent profit report was a "standout result", with organic revenue growth of 9% complemented by strong contributions from two acquisitions.

Revenue of $60 million, up 28% year on year, exceeded guidance, and underlying EBITDA of $10.4 million, up 41% year on year, was also strong.

Morgans said:

CCR has driven growth and scale to become a key player in the domestic contingent collections market. We see CCR as well positioned to continue to consolidate its position in ANZ and the much larger UK market, organically and via M&A in the coming years. We derive a $0.30/sh price target, which informs our Speculative Buy recommendation.  

Credit Clear shares are currently changing hands for 17 cents.

The post 2 ASX fintechs to buy for 60% to 70% returns appeared first on The Motley Fool Australia.

When the dust settled there were a few that survived the economic headwinds, regulatory changes and thin margins. 

At the time of writing however, broker Bell Potter has identified fintech company Beforepay Group Ltd (ASX: B4P) as one that could explode in the near future. 

What is Beforepay?

Beforepay Group provides online payment services through mobile application. It offers consumers to manage their personal finances, offering additional access to pay earlier, without having to rely on credit cards or other forms of revolving debt.

While it isn't technically a BNPL, it provides 'Pay on Demand', giving customers access to their salaries before their payday. It charges a 5% transaction fee and gives users the choice between repaying their loan on their next payday or over 4 weeks. 

After its initial public offering (IPO) a few years ago, its share price plummeted 44% and fell to as low as 0.25 cents per share back in 2022. 

However, since then, it has climbed consistently, and at the time of writing, is sitting at almost $2 per share, having risen more than 200% in the last year alone.

Solid reporting season news

In its Q4 FY25 Business Update, BeforePay released the following data: 

• The Company achieved a quarterly net profit before tax (NPBT) of $2.4m, up 76% on the Q4 FY24 figure of $1.4m, and up 113% from the previous quarter
• Revenue increased to $10.4m, up 15% YoY (year-on-year or YoY)
• Increased 12% YoY to 269,558
  

Beforepay Group CEO, Jamie Twiss said, 

This quarter's result marks another milestone for the Group, with a significant increase in profitability, continued strong growth, and a series of client and partnership announcements for Carrington Labs. I couldn't be happier with this result; it's the perfect way to end a strong financial year.

Plenty of room left for growth

Despite rising significantly over the past year, broker Bell Potter believes the share price could continue the upward momentum.

The broker has a "buy" recommendation and price target of $3.00. 

This indicates an upside of almost 54% from current levels. 

Increased revenue, an active user base and lower default rates were all catalysts behind the recommendation. 

The post The fintech stock that could be set to soar appeared first on The Motley Fool Australia.

• Buy now, pay later shares started February in the red
• Block's ASX listing crashed amid a sell-off in the United States
• Interest rate rises in 2022 were flagged by the RBA this week
• Block and Zip recovered some of their losses today

Buy now, pay later (BNPL) shares have had a shocking start to the month but some edged higher today.

Block Inc CDI (ASX: SQ2) share price has fallen nearly 15% since market open on 1 February. Zip Co Ltd (ASX: Z1P) has fallen nearly 13% in the same time period. However, in today's trade Block climbed 0.88% while Zip Co jumped 3%.

Let's take a look at what's been happening to BNPL shares lately.

BNPL woes

Block and Zip are not the only BNPL shares to fall in February. The Openpay Group Ltd (ASX: OPY) share price has descended 13% since market open on 1 February, while Beforepay Group Ltd (ASX: B4P) has slipped 9%.

Sezzle Inc (ASX: SZL) has also shed 13% in the same time period. In today's trade, Openpay held steady while Beforepay fell 4.64% and Sezzle finished 0.89% in the red.

Block's ASX listing dived after the company's US listing plummeted. Block Inc (NYSE: SQ) fell 20% between market close on 1 February in the US and 3 February.

Investors sold Block shares after rival Paypal's quarterly results fell short of market expectations. Paypal Holdings Inc (NASDAQ: PYPL) fell a mammoth 29% between market close on 1 February and 3 February in the US.

However, in after-hours trade, Block's US listing has gained more than 3% and Paypal has edged ahead 1.5%. This could be helping the company's ASX listing and confidence in the BNPL sector overall.

Zip's shares also fell heavily this week amid negative sentiment in the industry. My Foolish colleague Aaron noted any Reserve Bank of Australia rate hikes could impact consumer spending. And the Zip business model depends on this spending.

BNPL's shares suffered amid an overall tech stock slide this week. The S&P/ASX All Technology Index (ASX: XTX) dived almost 4% between market open on 1 February and close today. The index finished today 0.39% ahead.

BNPL share price recap

BNPL shares have suffered major losses in the past 52 weeks.

In the past year, the Zip Co share price has dived 63%. Meanwhile, Openpay has crashed 82% and Sezzle has plunged 74%. Meanwhile, Beforepay has shed 55% since joining the ASX this year, while Block has slipped 17%.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has returned more than 5% in the past year.

The post Some BNPL shares finished a horror week on a high. Why? appeared first on The Motley Fool Australia.

• The Beforepay share price is rebounding after tumbling 44% on its IPO yesterday
• Beforepay is a fintech pay-on-demand company offering users salary advances
• Right now, its stock is still trading at $2.11 – 38% lower than its prospectus' offer price

The Beforepay Group Ltd (ASX: B4P) share price seems to be getting back on the horse after crashing 44% on its float.

The pay-on-demand company debuted on the ASX at 11 am yesterday after offering its shares for $3.41 under its prospectus. Unfortunately, after finalising its initial public offering (IPO), its stock tumbled to close yesterday's session at $1.905.

However, Tuesday seems to be a brighter day. At the time of writing, the Beforepay share price is $2.11, 11.02% higher than its previous close.

Let's take a look at the ASX newbie's rollercoaster start to its time on the market.

But first, what is Beforepay?

Beforepay is a financial tech company providing those who use it with advances on their salary.

According to Beforepay chair and former Westpac Banking Corp (ASX: WBC) managing director and CEO, Brian Hartzer, the company is filling a gap for on-demand access to credit.

Hartzer says that the company's technology provides a "suite of budgeting tools", delivered through formats including smartphone and online applications, custom budgeting tools, and a "pay-cycle detection algorithm".

Additionally, between its launch in August 2020 and October 2021, Beforepay had a 25.3% compound monthly growth in active users and advanced $170.5 million of pay.

On its debut, the company released an operating update on its December quarter wherein it provided $77 million of pay advances – up 361% on the prior comparable period.

On top of that, its default rates had more than halved, reaching 3% in the quarter.

What sent the Beforepay share price tumbling after its IPO?

It's hard to say what made the market turn its nose up at Beforepay's stock's float.

As part of its IPO, the company raised $35 million and was left with 46.4 million shares.

That saw it with an expected market capitalisation of $158 million. However, come yesterday's close, the Beforepay share price saw the company with a valuation of around $88 million.

The proceeds of the offer will help the company acquire more customers, grow its Cash Outs, refine its products and models, explore overseas opportunities, and pay for the costs of the offer.

The post Beforepay (ASX:B4P) share price recovers 11% after disastrous IPO appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are dropping:

Beforepay Group Limited (ASX: B4P)

The Beforepay share price is down 42% to $1.95. This follows the completion of the personal lender's initial public offering (IPO) today. Beforepay raised $35 million at $3.41 per new share. These funds will be used to invest in additional customer acquisition, support growth in cash outs, invest in product and credit model refinements, and explore the viability of overseas opportunities.

Firefinch Ltd (ASX: FFX)

The Firefinch share price is down 1.5% to 73 cents. This appears to have been driven by weakness in the gold price which offset a solid quarterly update. According to the release, Firefinch's quarterly production was 11,115 ounces of gold. This was towards the upper end of its guidance range of 10,000 ounces to 11,500 ounces.

Kogan.com Ltd (ASX: KGN)

The Kogan share price has fallen 3% to $8.00. This follows the release of an update from Wesfarmers Ltd (ASX: WES). That update revealed that Wesfarmers' Catch business delivered first half gross sales growth of just 1%. As Catch and Kogan have previously had similar growth rates, this update may not bode well for the latter's half year results next month.

South32 Ltd (ASX: S32)

The South32 share price is down over 3% to $4.04. This mining giant's shares have fallen today amid weakness in the materials sector. This offset a positive update on its Hermosa project in Arizona, United States. That update revealed that the pre-feasibility study (PFS) for the Taylor Deposit demonstrates potential to establish Hermosa as a globally significant producer of metals critical to a low carbon future.

The post Why Beforepay, Firefinch, Kogan, and South32 shares are dropping appeared first on The Motley Fool Australia.

• Beforepay completed its IPO raising $35 million at $3.41 per new share
• Investors have sold down the personal lender's shares to a lowly $1.91
• This was despite the company revealing strong growth during the December quarter

The Beforepay Group Limited (ASX: B4P) share price has hit the ASX boards today and crashed lower following the completion of its initial public offering (IPO).

In afternoon trade, the personal lender's shares are down 44% from their listing price to $1.91.

The Beforepay IPO

Beforepay's shares landed on the ASX today after raising $35 million at $3.41 per new share. This gave the company a market capitalisation of $158.4 million at listing. However, with its shares crashing today, its market capitalisation has now dwindled to approximately $90 million.

The proceeds from the IPO are to be used to allow Beforepay to invest in additional customer acquisition, support growth in cash outs, invest in product and credit model refinements, explore the viability of overseas opportunities, and pay costs associated with the offering.

What is Beforepay?

According to its prospectus, Beforepay was founded in 2019 to offer consumers a better way to manage their personal finances. This is by providing the flexibility to access their pay earlier, without having to rely on credit cards or other forms of revolving debt.

In doing so, Beforepay believes that it meets the demand of consumers who have been increasingly rejecting these forms of credit, while filling a gap in the market for flexible, transparent and on-demand access to credit.

Beforepay's Chair, former Westpac Banking Corp (ASX: WBC) CEO Brian Hartzer, commented: "I'm delighted to see Beforepay list on the ASX today. The strong support we've received from investors is testament to the growth Beforepay has delivered as a startup and the opportunity ahead of us as a public company."

"On behalf of the Board I'd like [to] thank our existing shareholders for their support during the early stages of our business and welcome the many new shareholders, whose investment in Beforepay is a vote of confidence in both the Pay on Demand industry and Beforepay's future growth," he added.

That confidence vote hasn't lasted long unfortunately. This is despite Beforepay revealing further strong growth during the December quarter. This morning it revealed pay advances up 361% to $77 million and active users up 199% to 139,100.

The post Beforepay (ASX:B4P) share price crashes 44% after IPO appeared first on The Motley Fool Australia.

• Beforepay will debut on the ASX on Monday
• Despite a similar name to Afterpay, it is a payday advance provider
• User numbers have exploded, but the company is burning through cash

Beforepay Group Limited (ASX: B4P) shares will list Monday on the ASX, with the fintech hoping to follow in the footsteps of its similarly named predecessor Afterpay Ltd (ASX: APT).

Afterpay shares were sold for $1 each at its initial public offering (IPO), before rising as high as $160.05 last year.

Beforepay is not a buy now, pay later provider, although it's in the related business of advancing money before a payday.

The business, which allows customers to access money before they receive their real pay packet, raises revenue from a 5% transaction fee.

Borrowers can pay back the debt from the coming paycheque, or over a 4-week period.

"Beforepay's product is designed to support customers who do not want to live beyond their means or accumulate revolving debt, but may need a bit of breathing room until they receive their next pay," the prospectus reads.

"Beforepay was committed to designing a business model that did not require consumers to take long-term, expensive and opaquely priced revolving debt."

Beforepay shares went for $3.41 apiece during its IPO, which closed last month.

All eyes will be on the stock price once it is unleashed on the ASX for general trade on Monday.

Strong growth but Beforepay burning through cash

The IPO gave Beforepay a market capitalisation of $158.4 million.

The company started signing up customers in August 2020 but by the time the prospectus was written in November, it had 125,000 active users.

Despite this growth, Beforepay is burning through cash like nobody's business.

The business made a $19.6 million net loss after tax for the 2021 financial year, off revenue of $4.5 million.

Beforepay chair and former Westpac Banking Corp (ASX: WBC) chief executive Brian Hartzer said the numbers are on the improve.

"Loss rates and costs continue to decrease and growth is increasing in both the acquisition and retention of a well-diversified customer base of working Australians," Hartzer said in November.

"This demonstrates the broad appeal of the product and a sizable market opportunity."

In an argument similar to buy now, pay later, Beforepay appeals to younger generations that want to avoid traditional forms of credit, according to Hartzer.

"Beforepay's business model creates a strong value proposition for customers looking to take control of their finances without turning to credit cards or other forms of revolving debt."

Beforepay was founded in 2019 by Tarek Ayoub, who was chief executive until he stepped aside last May. The current chief, Jamie Twiss, is another former Westpac executive.

Ayoub still holds an 11.8% stake after the IPO, worth $18.8 million.

The post Can Beforepay replicate Afterpay when it lists on the ASX on Monday? appeared first on The Motley Fool Australia.

At $3.41 per share, the IPO will open for applications at the end of the month and the shares will commence standard trading on the ASX on 17 January.

The business name draws obvious comparisons to market darling Afterpay Ltd (ASX: APT), which is due to disappear from the ASX by March. 

After a spectacular publicly listed life that saw the shares multiply more than 100 times since IPO, the buy now, pay later provider will be absorbed into US giant Square Inc (NYSE: SQ).

In contrast, Beforepay is effectively a payday lender, allowing users to access money before their actual pay packet lands.

As The Motley Fool previously reported, the business makes money from a 5% transaction fee and users can pay off the debt from the next paycheque or over 4 weeks.

Former Westpac Banking Corp (ASX: WBC) chief and Beforepay chair Brian Hartzer said the company offers a great alternative for Australians needing credit.

"Beforepay's business model creates a strong value proposition for customers looking to take control of their finances without turning to credit cards or other forms of revolving debt."

Burning cash for growth

The startup only started taking customers in August 2020, but already boasts 125,500 active users.

"Loss rates and costs continue to decrease and growth is increasing in both the acquisition and retention of a well-diversified customer base of working Australians," Hartzer said.

"This demonstrates the broad appeal of the product and a sizable market opportunity."

Make no mistake, Beforepay is currently burning cash in an early growth stage. It raked in $4.5 million of revenue for the 2021 financial year, while copping a $19.6 million net loss after tax.

The ASX listing will raise $35 million while giving the company a market capitalisation of $158.4 million.

The company was founded by former chief executive Tarek Ayoub, who in May handed over the reins to another former Westpac staffer, Jamie Twiss.

Ayoub will still hold 5.5 million shares after the IPO, representing an 11.8% or $18.8 million stake.

"The IPO will enable us to support more customers and to accelerate our growth, both in Australia and potentially overseas," said Twiss. 

"I'm proud of the scale we've achieved in just over 12 months. I believe that we've only just scratched the surface in terms of growth and have the right team to execute on our strategy going forward."

The post Beforepay (ASX:B4P) just launched its IPO appeared first on The Motley Fool Australia.

Beforepay doesn't work in the same field as Afterpay. It's not a buy now, pay later (BNPL) provider.

Instead, it provides 'Pay on Demand', giving users access to their salaries ahead of their payday. It charges a flat 5% transaction fee and gives users the choice between repaying their loan on their next payday or over 4 weeks.

And now, Beforepay is gearing up to float on the Australian exchange. Let's take a look at what the new year could bring to the ASX.

After Afterpay, comes Beforepay's IPO

Beforepay is readying itself to raise $35 million through its Initial Public Offering (IPO), offering shares for $3.41 apiece.

Beforepay's joint lead manager, Shaw and Partners has announced the company is planning to list under the ticker, ASX:B4P.

The company started operations in August 2020. It has since advanced $170 million of its customers' pay-packets.

It is experiencing a 30% compound monthly growth rate, excluding COVID-19 lockdowns.

Finally, Beforepay's annualised revenue run rate in October was $14 million.

However, the company hasn't yet turned a profit. Over financial year 2021, Beforepay brought in approximately $4.5 million and reported a loss after tax of approximately $18.7 million.

At this point in time, Beforepay's IPO is only open to Australian sophisticated and institutional investors.

However, according to reporting by The Australian, the general market might be able to get their hands on a piece of Beforepay in a matter of months. The publication claims Beforepay is targeting a list date of 17 January.

The publication also claims Beforepay is hoping to float with a market capitalisation of $158 million.

Additionally, those who will miss trading Afterpay shares on the ASX might find Beforepay more appealing for another reason.

Beforepay is reportedly signing on the BNPL giant's former chief financial officer, Luke Bortoli as a director.

The company is also chaired by former Westpac Banking Corp (ASX: WBC) CEO, Brian Hartzer, while former Westpac chief strategy officer and chief data officer James Twiss is its CEO.

The post First there was Afterpay (ASX:APT), but soon Beforepay will be hitting the ASX appeared first on The Motley Fool Australia.