Plus500 shares plummet as sales collapse

SPREAD Plus500 has betting been branded firm a business “in reverse” following a collapse in revenue.

Shares plunged by almost a third after the Israeli company’s first-quarter revenues fell 82pc to $53.9m (£41.3m) compared with the same period last year.

The dramatic fall to 495p wiped £225m off the value of the online trading platform, leaving shareholders such as Odey Asset Management, which has a stake of almost 10pc, nursing heavy losses. Plus500 blamed “subdued” markets for the slide in sales.

“Given the level of global political and economic news, financial markets were surprisingly subdued in the period, which reduced the number of trading opportunities for customers,” said chief executive Asaf Elimelech.

But Justin Bates, an analyst at Canaccord Genuity, said Plus500 was a company “in reverse”. Increased regulation meant it was “very unlikely that the business can return to delivering the kinds of revenue and profit it did in 2017 and 2018”.

The spread betting platform began the year as one of the UK’S most shorted stocks, but most investors who had bet against the company missed out on profiting from the most recent share price collapse.

The number of shares on loan to investors betting that the price would fall had decreased from 6pc at the end of February to just 0.5pc, according to data from IHS Markit. This suggested short sellers opted to lock in their profits following a 30pc share price plunge in February triggered by a profit warning.

Plus500’s founders also cashed out in the months before its share price collapse. They sold a £145m stake in September for “personal reasons” as regulatory changes hit the sector.

Plus500 has been hit by a regulatory crackdown on highly speculative financial bets over fears that punters risk running up huge losses on products they do not fully understand.

Penny Judd, Plus500’s chairman, wrote in its annual report that customer behaviour was “adjusting” to the leverage limits.

Analysts at Peel Hunt said “concerns remain [over] the longer-term sustainability of the business”.