Shares in contracts for difference and online trading firm Plus500 (PLUS) jumped 5% to £14 after another strong trading update and the appointment of David Zruia as permanent chief executive.
Driven by a number of positive trading updates since lockdown, the shares have put on 55% year-to-date.
David Zruia has been with the firm for 10 years and has served as interim chief since 20 April. He commented, ‘given our performance in the first half, we remain very confident about the prospects for the company.’
HEIGHTENED VOLATILITY
The volatility index or VIX - also known as the fear index - has remained elevated above the 30 level for the last few months. This level indicates expected daily variation of around 2% for the S&P500 index.
Since lockdown, most trading platforms have experienced an increase in trading activity influenced by more people working from home and the lack of sporting events.
Plus500 attracted 198,176 new customers during the first-half to 30 June compared with 47,540 in the same period last year, leading to a record number of active clients and total revenues of around $564.2 million against $148 million in 2019.
As we reported on 9 April, the challenge will be to hold on to clients when markets quieten down, but giving them a ‘good’ experience during current conditions will no doubt be helpful for future retention rates.
On this front the firm noted that the ‘consistently high level of quality and performance of Plus500's market-leading proprietary technology platform and the continued dedication and hard work of our employees in extremely challenging circumstances ensured that customer retention remained strong.’
Minimal capital expenditure requirements and low capital intensity led to high cash generation and strong earnings before interest, tax, depreciation and amortisation (EBITDA) margin for the period.
Investors will get more detailed numbers on profitability when the company releases half-year results on 11 August.
