January 3, 2018 / 7:25 AM / in 10 months

Spreadbetting company Plus500 expects rise in 2017 profit, revenue

(Reuters) - Plus500 (PLUSP.L) expects to beat full-year profit and revenue expectations helped by crypto currency derivatives, the British spreadbetting company said on Wednesday.

Plus500 shares, which rose 130 percent in 2017, were up 18.5 percent at 1045 pence at 0836 GMT.

The company, which provides an online trading platform for retail customers to trade contracts for differences (CFDs), achieved strong volumes in crypto currency CFDs, it said.

Plus500 also said results were helped by rising customer numbers and strong trading, which continued through to the year end.

It said it had achieved record quarterly revenue in the final quarter of 2017 and about 246,000 new customers joined during the year, up from 104,432 in 2016.

Liberum analyst Justin Bates called the customer addition a “stand out figure”, well above Liberum’s forecast of 110,000.

“This implies an incredibly strong performance in Q4,” he said.

Analysts expect core earnings of $220 million on revenue of $385.7 million for the year which ended on Dec. 31, according to Thomson Reuters I/B/E/S.

A year earlier it reported core earnings of $151 million on revenue of $327.9 million.

Plus500 pointed to higher 2017 results four times last year.

CFDs allow people to bet on moves in share prices without having to buy the underlying stock. However, regulators have been tightening controls on the fast-growing 3.5 billion pound spreadbetting industry.

REGULATORY CHALLENGES

Shares in British spreadbetting firms sank last month after the European Securities and Markets Authority (ESMA) said it may curb core parts of their market under new powers from January.

Additionally, Britain’s markets watchdog said it had noticed steady growth in the volume of CFDs linked to digital currencies and would step up its scrutiny of the initial coin offering market or digital currency fund-raising, to see if new rules are needed to protect investors after issuing an alert in September.

The Financial Conduct Authority also said it supported the ESMA in its consideration of potential EU-wide product intervention. (bit.ly/2yFVEn9)

Plus500 said its “broad offering” allows customers to participate in the volatility of multiple crypto currencies, without owning the underlying asset.

“Plus500 remains focused on risk management which includes setting appropriate risk and leverage for all the instruments traded on its platform,” it said.

Plus500, whose rivals include CMC Markets (CMCX.L) and IG Group (IGG.L), is scheduled to report results for 2017 before the end of February.

Reporting by Noor Zainab Hussain in Bengaluru; editing by David Goodman and Jason Neely

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