Plus500 Shares Decline Hard Amid Record Customer Activity

Plus500 Shares Decline Hard Amid Record Customer Activity

The UK-based online trading platform Plus500 has announced a rise of more than 100K new customers since the start of the second quarter. However, the forecast for 2020 remains unchanged.

In addition, Plus500 also announced that more than half of its quarterly revenue was reduced to customers with exceptionally strong trading performance. Shares of Plus500, PLUS, crashed at around 16 percent on Monday to its lowest level at 1,010.0 pence since March 30.

Plus500 See High Client Operation in Q2 2020

According to a press release issued by the company, Plus500 has a record amount of customer trading operation in the second quarter of 2020.

The platform has introduced 100,574 new traders since the beginning of Q2. Q2 of the Company has risen to a record high of $249.00 million in Q2. However, gross revenue was decreased to $102.5 million due to consumer earnings.

The explanation is that, unlike other brokers, Plus500 functions as a trading desk where the network functions as a counterpart to the position of traders. It’s a market maker that when people win, they can lose their money.

The press release stated:

The Board continues to expect Customer Trading Performance to be stable over time, consistent with the aggregate Customer Trading Performance2 that has traditionally provided an insignificant proportion of revenue for many years.

Unchanged Outlook

Despite the increase in new customers and consumer engagement, the company said that sales and profitability remained the same for all of 2020 and is expected to be consistent with business expectations.

The uncertainty as to the length of current levels of volatility and the pressure that social distancing and work from home initiatives would give rise to market activity remains unclear. The company agreed to include more information in the second quarter report later in July.

As David Zruia, Interim Chief Executive Officer, admits, the performance of customer trading is subject to high volatility and large market movements. They are likely to fluctuate.

This is magnified during times of elevated market uncertainty, such as those we are currently experiencing, and given the increasing size of the company. However, we continue to expect this output to regress to a near-zero medium-term historic level and our outlook for the year remains unchanged.

Review of Plus500 Shares

Review of Plus500 Shares

Shares of Plus500, also known as PLUS, crashed about 16% early on Monday at the start of the London trading session. At the point, since March 30, PLUS has fallen to its lowest level at 1010.0 pence.

After three negative sessions, PLUS is now trading at £1,118, which is 7.91 per cent negative. The chart looks rather bearish, and a close below £1,040.0 will be crucial for further declines.

Previously, Plus500 told the company that it had acquired 39,600 PLUS shares on Friday in compliance with its buyback program announced in February 2020.

The Company shall retain the repurchased shares in the bank. Following the acquisition of these shares, the total number of ordinary shares in question will be 106,038,175 (excluding treasury shares) and the company will hold 8,850,202 ordinary treasury shares. The cumulative voting rights for Plus500 would then be 106,038,175.