Plus500 shrugs off lower users

A lack of market volatility in the first half contributed to a 19 per cent fall in active users for Plus500 (PLUS) as the trading platform experienced the earnings swings that can closely mirror the mood of the market. This is mostly out of the company’s control, but these results demonstrated the continued ability of its unleveraged balance sheet to keep throwing out cash for investors, with a $60mn (£47mn) share buyback included alongside a similar cash sum for its dividend.

Overall, the company has done everything operationally within its control to stay on the right side of market sentiment, easing the wait for more volatility and a broader geographic spread to lift long-term earnings. Investors clearly agree with that combination of positive factors, which helped lift the shares on results day despite the fall in profits.

The strategy was clear in the new licences that Plus500 gained during the half. In February, it secured permission to operate in the high growth UAE market, while the Japanese trading platform, in the largest retail forex trading market in the world, is about to go live after months of development. In aggregate this will generate further growth with Plus500 able to fund this expansion entirely through its own resources. It also plans a sustained push for growth in the US market. Costs fell slightly during the half to $196mn (2022: $208mn), with a small decrease in technology spending the main difference.

Broker Liberum forecasts a price/earnings ratio for 2024 of 5.2. The market seems to be expecting a wider contraction in margins that we have actually seen so far, which suggests that the company is underpriced. Speculative buy.

Last IC view: Hold, 1,928p, 14 Feb 2023