Plus500’s Quarterly Revenue Falls 65%, Stock Price Hit Again
Israeli firm Plus500, listed on the London Stock Exchange with the ticker PLUS, is facing a difficult period after losing over 30% on the news that the company’s quarterly revenue figures declined by over 80% in annual terms. On Monday, the stock price added 3%, but the FCA-regulated company, which provides a platform to trade Forex pairs and contracts for difference (CFDs), is still under pressure.
Plus500 Releases Disappointing Report
On April 12, Plus500, which sponsors famous football club Atletico Madrid, reported that it had lost $28 million on betting against customers in the first quarter of this year.
In the last quarter, the company’s revenue was $53.9 million, 82% below the revenue figure recorded in the same period in 2018, at $297.3 million, and 65% lower than the $154.8 million reported in the fourth quarter of last year.
The company’s average revenue per client declined by 60% in annual terms, to $500 from $1,363, and 64% compared to the Q4 of 2018 when Plus500 recorded average revenue per user at $1,523.
On Friday, the company’s stock price tumbled by over 44% to its daily low, but rebounded by the end of the day and recovered some losses, closing in red at -31.2%. Plus500 is dragging down an industry that is already suffering from more regulation triggered by the European Securities and Markets Authority. The regulators have put pressure on Forex and CFD brokers in an attempt to protect retail traders. Brokers are required to reduce the leverage and make sure to comply with the new rules touching upon how the CFDs are traded.
As we reported earlier, Plus500 has been already hit by a huge crash in mid-February, when it was revealed that the annual report had a drafting error concerning clients’ trading activity.
Plus500 CEO Asaf Elimelech commented on the quarterly results:
Given the level of global political and economic news, financial markets were surprisingly subdued in the period, which reduced the number of trading opportunities for customers. While revenue in the quarter was disappointing, we have much to be encouraged about.
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 and further improve the customer experience and the service offered.
Plus500 Future is Uncertain
After the second major stock crash on Friday, investors are wondering if there are any bullish signs that could support the price in the longer-term.
On Friday morning, Berenberg Bank downgraded the shares of Plus500 to a hold rating in a research file sent to investors. Thus, the target price for the CFD trading firm was GBX 770 ($10.06), down from their previous target price at GBX 1,800 ($23.52). However, Plus500 performed so poor that its stock price tumbled below Berenberg Bank’s expectations, now trading at around GBX 505.
While Plus500 investors have lost over 75% year-to-date, the top executives enjoy incredible wages and bonuses. Thus, CEO Asaf Elimelech and Elad Even-Chen, the company’s chief finance officer (CFO), had salaries of about £4.6million each last year, which is more than double compared to 2017. The salaries included a £3.6million bonus for each.
Recently, about 48% of the company’s shareholders voted against a change to the pay policy that increased the bosses’ salaries. Despite the fact that the bonuses were backed by Plus500’s record performance in 2018, investors didn’t benefit from it, as the stock price fell 1.7% over the year.
Perhaps the only good news from the recent quarterly report is that Plus500 added its client base by 21,306, which is 10% more than the same period of 2018.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.