Spread-betting firm Plus500 'stuck in reverse' after revenue collapse

14 Avril, 2019, 14:53 | Auteur: Auguste Feret
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Shares in the company tumbled by 224½p, more than 31 per cent, to close at 495p, their lowest level in almost two years, after it said that revenues for the three months to the end of March had dropped to $53.9 million, down nearly 82 per cent from $297.3 million a year earlier, when trading had been buoyed by interest in cryptocurrencies. There were 97,921 Active Customers in the period, down 4% on the previous quarter.

Nevertheless, shares of Plus500 plummeted by 25% at the time of writing in London.

Plus500 offers so-called "contract for differences" to ordinary people, which are risky leveraged bets on the short-term movements of share and asset prices.

The company blamed subdued market activity on the fall in first quarter revenue.

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The company said 2019 profits are likely to be "materially" lower than expected due to a sales hit from new European Union regulations combined with plans to maintain marketing spend.

While revenue in the quarter was disappointing, we have much to be encouraged about.

Peel Hunt said Plus500 is a digital marketing business that relies on a relatively low fixed cost base with variable costs targeting client acquisitions.

In February, Plus500 saw its share price drop by almost a third after it warned over its full-year profits, blaming a regulatory clampdown across Europe. "Given recent regulatory changes, it is imperative to attract, engage, and retain valuable customers and the company is working on a number of initiatives to extend its reach". Revenue from outside the European Economic Area represented 54% of turnover in the first quarter, compared to 40% in the final quarter of 2018.

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