Shares of Plus500 Ltd (LON: PLUS), an online trading platform, plunged as the group said it was “impossible to predict market conditions for the rest of the year” after sales nosedived in the first quarter because of low volatility and a restrictive regulatory environment.
Total sales fell to $53.9 million during the three months that ended March 31, from $297.3 million a year ago, the Israel-based firm with subsidiaries in the UK, Cyprus, Australia, Singapore, and Bulgaria, said in a trading statement early on Friday.
“Extremely subdued” financial markets across most asset types hit active customer numbers and average revenue per user, which dropped to $550 from $1,363 a year earlier. The 97,921 active customers in the period under review were down from 218,187 in the prior-year period.
As part of an investor protection program, the European Securities & Markets Authority prohibited the offering of binary options – a trade in which the payoff is either some fixed monetary amount or nothing at all – to retail clients from July 2, undermining sales in the industry. It also placed restrictions such as leverage limits and margin close-out relating to the provision of Contracts for Difference (CFDs) to retail investors from August 1.
In response to the restrictive trading environment, the firm continued to diversify beyond its European Economic Area retail customer base. In the first quarter, 54% of group turnover was from outside the region that falls under the jurisdiction of the European Securities & Markets Authority, versus 40% sequentially in the previous quarter.
Looking ahead, the group said it was too early to draw conclusions about the full-year outcome based on the results over the first three months.
“Plus500 continues to lead the industry in new customer acquisition, both in absolute numbers and in the efficiency of the marketing spend,” Chief Executive Officer Asaf Elimelech said in the statement. “Given recent regulatory changes, it is imperative to attract, engage, and retain valuable customers and the company is working on a number of initiatives to extend its reach.”
Nevertheless, shares of Plus500 plummeted by 25% at the time of writing in London.
Price: 538.00 Price Change: -181.40 Percent Change: -25.22