• April 14, 2024

U.K. retail investors dive into derivatives, driving an ‘exceptional year’ for trading platform Plus500

UK home investors are aggressively trading derivatives, according to the latest results from the Plus500 platform.

The company listed on the FTSE 250
PLUS + 0.40%
offers online trading in Contracts for Difference (CFDs) – over-the-counter (OTC) financial derivatives that allow investors to trade on price movements across a variety of assets. CFDs are illegal in the United States due to restrictions imposed by the Securities and Exchange Commission.

Plus500 shares fell about 1% on Wednesday but have gained 55% over the past 12 months. Shares in competing IG Group
IGG, -0.68%
have increased by around 20% over a year.

In its final results for 2020, the platform identified an “exceptional year” in “unprecedented market conditions”. In 2020, over 82 million customer transactions were made, compared to 35 million in the previous year. Customer deposits grew from $ 1.0 billion to $ 2.9 billion.

The company announced it had added 294,728 new customers out of 91,388 in 2019. It also announced a new share buyback program valued at $ 25 million. It has been found that trade remains “elevated” so far in 2021.

Regarding analyst reactions, a team led by Rahum Karim from Liberum said, “The company’s scalable technology and agile marketing algorithms have enabled Plus500 to gain significant market share, improve customer loyalty and further improve financial returns . ” He rated the company as a purchase.

Canaccord Genuity was on the other end with a sell rating, experiencing a lower payout ratio and investment plans that the company announced that require funding, such as expanding CFDs to new regions and new financial products for customers.

The FTSE 250
MCX, -0.79%
fell 0.7%. The FTSE 100
UKX, -0.18%,
Meanwhile, it fell 0.1%, which was accompanied by the losses in European markets. The data showed that UK annual inflation rose in January but remained well below the Bank of England’s 2% target.

Stocks of Rio Tinto
RIO + 2.43%
led the winners with a 2.8% increase after the miner announced and announced a profit increase of 22% in 2020 Special dividend.

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