Heavy trading activity in volatile markets lifts Plus500 as high-flying fintech eyes continuing its acquisition spree
- Full-year profits now expected to be ‘significantly ahead’ of expectations
- Firm’s Q2 has been ‘very strong, supported by current market conditions’
Volatile market conditions have boosted trading platform Plus500, with full-year revenue and profits now set to come in ‘significantly ahead’ of expectations.
The FTSE 250-listed Israeli firm told investors on Monday that second quarter trading had been ‘very strong, supported by current market conditions’, and it has ‘increasing confidence’ of a forecast-beating 2022.
Plus500, which lets investors trade on complex financial instruments, such as contracts for differences, added that performance had also been boosted by the development of new technologies and products, which have driven growth and diversification efforts.
Volatile markets have boosted trade for trading platforms like Plus500
Going forward, the firm said it would maintain growth through further organic investments and by ‘actively targeting acquisitions’.
M&A activity has been a key focus in 2022 for Plus500, which has already taken its first steps into Japan and the US with the acquisitions of EZ Invest Securities, and Cunningham Commodities and Cunningham Trading Systems, respectively.
The firm’s latest trading update casts doubt on the assumption that the meteoric rise in online trading, which has boosted platforms like Plus500 since the start of the pandemic, had began to slow.
While Plus500 reported a 26 per cent fall in pre-tax profit in 2021, the group’s active customer base remains at double its pre-pandemic levels.
Plus500 shares were up 3.2 per cent to 1,560p in mid-morning trading, bringing gains to 14.7 per cent year-to-date.
Commenting on the firm’s latest performance update, analysts at Peel Hunt said: ‘Our expectation that full-year forecasts would prove conservative has been borne out, only a month or so after the last upgrade.
‘Plus continues to benefit from active trading conditions, whilst the diversification of the business is ongoing.’
Peel Hunt has therefore boosted its target price for Plus500 from 1,860p to 1,920p and retained its Buy rating.
The analysts added: ‘Whilst there is little detail in the short update, we believe the strong performance re-lates to customer activity and a positive contribution from trading performance (we remain conservative on the full-year assumption).
‘We now expect EBITDA of $343million, which compares to consensus before today’s update of $300million.’