August 13, 2019 / 6:30 AM / 8 months ago

Plus500 shares jump on buyback, new customer additions

(Reuters) - Online financial trading platform Plus500’s (PLUSP.L) shares jumped 20% on Tuesday, boosted by a new share buyback plan and solid new customer additions.

Plus500, whose shares have been pummelled in recent months by a collapse in revenue due to lower market volatility and a European clampdown on highly leveraged betting, said it was on track to meet expectations for 2019.

It said it planned to buy back of up to $50 million (£41.4 million) of its shares and also revised its distribution policy to return 60% of net profit to shareholders, with half of that through dividends.

Plus500 shares rose 19.4% to 682.2 pence by 0824 GMT, making them top performers in the FTSE 250 midcap index .FTMC and marking a recovery from a near 60% plunge so far in 2019.

“This company will take quite a while to recover a rating, but remains as operationally excellent as ever,” Liberum analysts, who have a “buy” rating on the stock, said.

The company added new customers, with numbers rising 19% to 47,540 in the first half compared with the second half of 2018.

“The group performed well during what was a difficult period for the entire industry,” Chief Executive Asaf Elimelech said. “Financial markets from February 2019 to April 2019 were very stable, providing a limited number of trading opportunities for customers.”

Net profit more than halved to $51.6 million for the six months ended June 30, partly reflecting low levels of volatility as investors held back their positions during the heated U.S.-China trade spat and ongoing Brexit uncertainty.

Plus500, hit hard by a regulatory clamp-down in Britain and the European Union on certain complex financial products, said the Australian securities watchdog had received new powers to address abuses in the sale and marketing of a range of such products.

The company competes with IG Group (IGG.L) and CMC Markets (CMCX.L) and provides an online trading platform for retail customers to trade contracts for differences (CFDs), which allow traders to bet on financial asset prices without holding the asset.

While Plus500 said revenue had picked up recently, its first-half results still reflected pressure from regulators in Europe and Britain as they tighten rules on products that allow anyone with a bank card to make highly-leveraged bets on financial markets.

Making matters worse, the CBOE Volatility Index , the stock market’s main gauge of volatility and investors’ appetite for risk, ran at similarly low levels to a year ago for much of the first half of 2019.

(FOr a graphic on 'Regulatory clampdown knocks Plus500 and its peers', click

Reporting by Muvija M in Bengaluru; Editing by Bernard Orr and David Holmes

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