Online trading platform Plus 500 has reported record levels of customer activity in the second quarter and welcomed more than 100,000 new traders amid market volatility caused by the coronavirus crisis.
The spreadbetting platform, which allows customers to bet on whether a share price will rise or fall, today announced record revenue from customer income of $249m (£196.2m) in the latest quarter.
The Israel-based company attributed the results to “significant numbers of news customers”, as it welcomed 100,574 new traders over the past three months, ahead of expectations. This added to the 83,000 new customers the company attracted in the last quarter, as the coronavirus crisis began to upset markets across the globe.
Plus 500 noted that persistent market volatility caused by the pandemic has spurred a boom in bets.
The coronavirus crisis has lured dormant traders to return to the markets as stock vulnerability for companies around the world tempted traders to try and cash in on the crisis.
Plus 500 also said it had seen heightened activity from existing customers, contributing to an increase in net client deposits, which currently stand at $488.4m. This marks a 300 per cent increase in client deposits since the start of the year.
David Zruia, Plus 500 interim chief executive, said: “We are pleased the business has continued to generate record levels of customer income, added over 100,000 new customers so far in [the second quarter] and has materially grown the net client deposits balance to almost half a billion dollars.”
However, Plus 500’s shares fell eight per cent to 1,115p as he added that Plus 500 expects annual revenue to be in line with expectations. Zruia said trading gains from customers reduced overall revenue to around $102.5m for the quarter.
Unlike other platforms that act as middlemen for customer bets on financial markets, Plus 500 markets itself for its own customers. This means the broker can lose money if customers bet correctly more frequently than incorrectly.
The firm said that due to customer gains, it expects the trading results to have a neutral effect on its overall business.
“This performance reflects the benefits of the group’s best-in-class platform, which has enabled it to continue to achieve exceptional user growth, and undoubtedly take share,” analysts at Liberum said.
“This dynamic, combined with the quality of these users, bodes extremely well for the medium-term, as demonstrated by the tripling in net client deposits since year-end. This outlook leaves us remaining confident in our FY20 estimates despite the negative move in customer trading income seen in recent weeks as markets have rallied.”