Cmc Markets Share Discussion Threads

[farrugia] 03/9/2021 11:38

In a past report they've been quoted that they were going to reduce the extent of their hedging and take on more risk...

CFD providers without offshore subsidiaries are in a tough place in the UK and Australia now - leverage of clients is severely restricted. They were saved in 2020 by the huge trading wave of new clients but its unwinding now. Their share trading offering only generates low revenues compared to their CFDs one.

[arja] 03/9/2021 11:37

nigelpm,
so in effect they hedge those who trade using a none technical approach such as using charts , ie a punt or gamble, as they would mainly be in the 70% or so who make net losses . Other traders are net winners in the main. So the adverts about 70% losing money is really missleading as of course those who think of it like betting a horse race will probably lose overall.

[imastu pidgitaswell] 03/9/2021 11:27

1121 - fair point, I didn't read it too carefully. Seems a bit odd, given what a thing they made of their cost base being variable and responsive to volumes.

Happy to stay away.

[nigelpm] 03/9/2021 10:41

They hedge some and not all clients - I've spoken to some of their team in the past - they carefully monitor all clients and hedge winners and don't hedge losers

[arja] 03/9/2021 09:23

must be some legal restriction and I must remember to ask them .

[arja] 03/9/2021 08:47

Farrugia ,
are you sure about that as I understood they did always hedge and says so in reports I read some years ago admittedly??. I have a spreadbet account but only make modest net gains and I often wonder why they do not offer level 2 DMA to compete with IG who have a monopoly ! Not being able to sell or buy in an auctions is a real pain in the proverbial !

[farrugia] 03/9/2021 08:04

The nutshell of this is CMC are not hedging clients meaning essentially that Client wins = CMC losses. You really need to have very deep pockets to run this model and you can get wiped out.

[imastu pidgitaswell] 03/9/2021 07:29

RE someone from yesterday - costs will not be higher, as so much of their salary and remuneration is variable compensation.

I don't know what the steady state, if there is one, but taking the 2020 total costs of £180m is broadly reasonable. Income of £250-£280m, so PBT of £70-£100m. No interest to speak of, tax at 20-25% (will be 25% soon), so earnings of c£50-£80m. I don't think it can be any more precise than that, at this stage.

So not that cheap. And given the uncertainty, you can see why the caution. I don't feel particularly inclined to wade in, it has come a long way in a couple of years, but at the same time it could be volatile at the very least. Given the variability of its income, and its highly leveraged returns model, it is always going to be a ride.

[shanklin] 03/9/2021 07:27

It would have helped if CMCX had not just advised Net Operating Income but what that would imply in terms of PBT.

[undervaluedassets] 03/9/2021 07:09

So volatile markets never return? Of course they do.

Like long term weather forecasting, financial markets cannot be called; And CMC can no more predict the volatility of markets more than anyone else can.

CMC has simply and appropriately reported the state of markets as they have found them. In July they looked buoyant. Through August and right now less so.

But the idea that markets are never volatile again and that abundant short term trading does not resume is clearly wrong.

In a few years time, the current share price will be seen for what it is. An opportunity.

[12toes] 03/9/2021 00:20

Cruddas owns 57% you moron

[marktime1231] 02/9/2021 22:06

OK am out, but hang on their revenue is net operating income, is ebitda except for adjusting how much they made or lost trading and hedging client positions. Good luck trying to understand what the figures are or could mean, they are clueless so what chance have we.

Terrific optimism from those hoping this was going to bounce back today or in a few days or ... the belief that things are so bad they can't get any worse is the stuff of gutters. No wonder this stock has traded on such weak p/e. Cruddas owns more than 50% no-one else more than 5% it is more likely we will see Shergar again than a bid to the rescue. If you are hanging on all the luck you will need it.

[nigelpm] 02/9/2021 22:04

Yes. That's roughly in line with my calcs but given summer period I'm not overly concerned

[rcturner2] 02/9/2021 21:46

There is something odd about the statement. One month ago they were predicting 330m+ for profit. Now they are predicting 250-270m. Yet when they made the 330m+ prediction they already had 4 months figures for the current year, so reasonable to assume that they made 110m in those 4 months (approx 25m a month). For the other 8 months to now add up to 140m profit in August must have dropped to about 15m, so a pretty significant drop.

[pyemckay] 02/9/2021 20:05

ok, fair point, I was trying to calculate quickly.

[saurish] 02/9/2021 19:49

250-280m forecast is for net operating income, not revenue.

[pj0077] 02/9/2021 19:40

There may be buyers but who is the seller? Founding shareholder Lord Cruddas owns 57% of the company & there's no indication that he's looking for an exit.

[pyemckay] 02/9/2021 19:39

lol. it was forecast 330m revenue for 100m profit =36eps
assume middle of range 250-280mforecast
250 rev = 20m profit. 7.2eps
265 rev = 35m profit = 12p.eps.
280 rev = 50m profit =18eps

The downside is still there imo. I havent added in extra costs.

10pEPS looks generous imo.


I was a holder but am out with a 30% loss .

[volvo] 02/9/2021 19:36

As mentioned earlier....people watch the stock market gyrations, CMC in its current position is an ideal buy out candidate, mega cash generative, buy with confidence, because people will happily take this out

[growthpotential] 02/9/2021 19:23

Dude, how are you getting to that figure? It is atleast 30p EPS as a minimum which is expected

[pyemckay] 02/9/2021 19:05

I calculate about 10-12p EPS based on the estimates of turnover. Thats quite a drop. No hurry to get back in yet.

[big_cat] 02/9/2021 15:42

IG is down 10% based on CMC profit warning. IMHO it is a better quality stock thus a better buy than CMC

[riverman77] 02/9/2021 15:42

The key point is they've said revenue will fall to 250-280 IF market conditions remain as they are for the next 7 months. Markets are currently very subdued so I think this is very unlikely, although i guess not impossible. It would be like an ice cream company that has had a bad couple of months because of wet weather, and then giving guidance on the assumption that it rains for the next 7 months.