ii view: Plus500 confirmed as Covid winner

by Keith Bowman from interactive investor |

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First-half momentum has continued into the second half at this online trading platform.

AGM trading update

ii round-up:

Online trading company and provider of trading contracts for difference (CFDs) Plus500 (LSE:PLUS) today confirmed that positive momentum seen in the first half had continued into the second half of its financial year. 

It has made progress across all key commercial and financial performance metrics, driven primarily by the strength and differentiation of its proprietary technology.

Plus 500 shares drifted marginally lower in afternoon UK trading having risen over 65% year-to-date. Shares of rival IG Group (LSE:IGG) are up around 15% during 2020. 

Ongoing volatile market conditions due to the uncertainty of the Covid-19 pandemic helped adjusted earnings to the end of June rise by over 400% to $362 million

New customer numbers had remained high into the second half with platform usage staying at elevated levels and customer deposits proving very robust.

Accompanying management comments flagged high confidence in the outlook given the group’s strong performance year-to-date.  

A third-quarter update is scheduled for the 27 October. 

ii view:

Plus500 operates an online trading platform for individual customers to trade CFDs. It had no debt as of the end of June 2020.

For investors, a focus on shareholder returns is attractive in the current ultra-low interest rate environment. A historic dividend yield of over 3% (not guaranteed) is complimented by ongoing share buybacks. Covid-19, by raising uncertainty and therefore price volatility across markets, has also brought increased customer numbers and activity. Outperformance of around 50% against rival IG Group year-to-date might suggest some investor caution is warranted, but the share price performance is closely linked to performance of financial markets. For Plus500, volatility is a good thing.

Positives: 

  • Product and geographical diversity
  • A focus on shareholder returns

Negatives:

  • Pending regulatory changes in Australia
  • Low volatility in financial markets hinders performance

The average rating of stock market analysts:

Hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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