, the online service provider for Contracts for Difference (CFD) trading, saw profits and revenues decline in its interim results, but is on track to meet expectations for the full year.
The company reported a net profit of $51.6 million for the first six months of 2019, down 56% from the last six months of 2018, and down 80% from the first six months in 2018.
Plus500 and the industry suffered after the introduction of the European Securities and Markets Authority’s product intervention measures, which implemented strict regulations on the margin offered for CFDs.
Plus500 also announced a $31 million interim dividend payout, 60% of its net profit, as well as a $50 million share buyback programme.
The online CFD provider was trading as high as 1435p at the beginning of the year but shares have since fallen significantly.
Shares rallied after the interim results trading 15.4% to 659.4p a share by midday
Asaf Elimelech, Chief Executive Officer of Plus500, commented: “The Group performed well during what was a difficult period for the entire industry. Financial markets from February 2019 to April 2019 were very stable, providing a limited number of trading opportunities for customers.”
H2 of 2018 was one of the most volatile periods in financial markets, which is a good thing for CFD providers, who benefit from the increased trading activity that follows volatile markets.
Plus500 told investors that its Q2 2019 churn rate of 16% was the lowest since it IPO’d in 2013. Customers deposits, net at 30 June 2019 were up 41% to $151.1 million, with 141,692 active users in the six month period.
The company said it was attracting a growing number of higher value customers, through the introduction of sophisticated trading tools and broadening its product offering.
Shares rallying after declining revenues and profits could be an indication that some investors expect upcoming financial market turmoil and therefore stronger revenues for the online CFD provider.
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