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Plus500 revenue jumps almost 500%, online trading platform gains from market volatility

Online trading platform Plus 500 (PLUS) said its revenue soared almost five times due to volatile world markets caused by the coronavirus outbreak

The Israel-based company reported on Wednesday that its first-quarter sales rocketed 487% to $316.6m, compared to a year ago. It also doubled its active users which jumped to 194,024 from 97,921.

The firm added that its average revenue per active user (ARPAU), an important metric that gauges the performance of its trading activities, jumped by 200%, showing that traders increased the bets they made as markets dipped and rose as the health emergency stalled economic activity across Europe and the US.

The London-listed stock, which sponsors Atletico Madrid (pictured), has performed well this year, yielding a 21.6% return year-to-date compared to a 28.3% loss in the FTSE 250 Index. Shares in the business closed up 1.5% to 1,093.5p on Wednesday.

plus500 stock chart

Chief executive Asaf Elimelech said: “As a result of the exceptional first-quarter performance, revenue and profitability for the full year are expected to be substantially ahead of current consensus expectations. However, as we remain at an early stage in the financial year, and there are global markets uncertainties as well as ongoing regulatory changes, it remains difficult to predict the outcome for the full year.”

The business said it will distribute at least 60% of its net profits to shareholders.

Plus 500 is a trading app that offers users financial instruments called Contracts for Difference (CFDs) to place bets on potential price swings in more than 2,000 currencies, commodities, and stocks, allowing them to leverage their positions by using margin accounts.

The firm’s first-quarter 2020 revenues represent 90% of the company’s annual 2019 sales, indicating the business is on track for a significant increase in its net profits by the end of the year.

However, analysts at Peel Hunt said is rate is unlikely to be sustained once “customers realise they’ve actually lost most of what they were willing to stake”.

 

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Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.