Financial trading platform IG Group (IGG) reported a strong third quarter as it milked market volatility and a retail trading frenzy. IG saw revenue jump 65% in the three months to 28 February 2021 to £230.3 million as new customers piled in to financial markets and existing clients traded more.
Large numbers of new investors have been attracted to trading financial markets this year thanks to social media platforms like Reddit drawing attention to hot stocks like US games retailer Gamestop, media firm AMC Entertainment and cannabis stocks.
IG believes that market volatility will stabilise in time but the surge in demand will mean hitting targets for new markets ahead of schedule. The company had set a £100 million to £160 million revenue target by 2022 for what it calls ‘significant opportunities’, areas beyond its core UK and EU markets and places like Australia, Singapore, Switzerland, Dubai and South Africa.
IG’s significant opportunities segment saw Q3 revenue jump 55% to £37.6 million, which means it has already passed the lower end of that 2022 target range in fiscal 2021, with £113.9 million booked so far. The current financial year ends 31 May.
IG stock rallied more than 5% to 852p.
DIGESTING TASTYTRADE
The acquisition of US online brokerage and trading education platform Tastrytrade was said to be progressing well with some regulatory approvals obtained and the deal is expected to close in the first quarter of 2022.
The business reported a 100% increase in trading accounts in February compared with the prior year while the education and content business saw new registrants growing over 100,000 in the two months to the end of February to nearly one million.
Analyst at Numis James Hamilton noted that the addition of Tastytrade will increase the high growth segment to 36.3% of IG total revenues next financial year from just 16.7% last year.
Following today’s results Hamilton has increased his current year revenue estimate by 8% to £832 million, while his earnings forecast moved up by 16% to 92.8p.
Hamilton’s 2022 earnings were nudged-up 7% to 68.6p as he ‘continues to assume a significant hangover period next year.’
The current consensus of analyst estimates for 2021 according to data provider Refinitiv is for company revenues to grow 14.5% to £742.1 million and earnings per share to grow 18% to 76.65p.
