Plus500 Share Discussion Threads

[base7] 07/7/2022 16:39

The update 2 months will hopefully be confirmed by the forthcoming H1 update & also hopefully we will reiterate that we continue to expect trading to remain strong & perhaps our US acquisition is gaining traction.With view to our increasing cash pile we will probably extend the buy backs further once the current $50mill has been invested & our dividends will increase further due to strong trading & less shares in issue.

[simplethesis] 07/7/2022 15:25

I second what the great djokovic1 says, and agree with the numbers, particularly the assessment of the earnings run-rate in H2.

Always remember that the lifetime earnings from each cohort of new customers is remarkably knowable and consistent. CTP will go up and down from quarter to quarter but it's irrelevant in the long run. The fact that the company seldom hedges externally means that reported revenues are more volatile, yes, but also that they don't have to tie up a load of capital on their balance sheet to deal with hedging counterpart risk.

While the cashflows from customers losing money in a somewhat accelerated fashion, as happened in Q1 and is very likely to have happened also in Q2, while they are effectively put on a P/E of zero by the market, since they are non-recurring and in the past, they come to shareholders in two ways: [1] excess capital is used to buy back again and again and [2] they are being used to back a lucrative clearing business in the US.

[djokovic1] 07/7/2022 14:23

Yes but the price is where it was before the 2 announcements were made about trading being significantly ahead (and I think the two months post announcement will also be great)..so one could argue it really isn't in the price

And the other lens to look at it is what P/E is it trading at ex-cash on the balance sheet. At a normalised earnings run rate of ~£2.1 with cash on balance sheet of ~£800m by end of the quarter (lets say excess cash is ~£400m). Thats an ex-Cash multiple of 5.1x

And they are buying back shares at a run-rate of 10% / Annum, so EPS grows 10% while standing still and you get it at ~5x

[rhatton] 07/7/2022 13:48

Of course, just thinking in terms of markets being forward looking, H1 is over now and we know it will be good. H2 remains to be seen

[oi_oi_savaloy] 07/7/2022 13:44

Potentially rHatton but wouldn't they have to rns a material change to their recent (and reiterated) update in that respect (May or June update)?

[rhatton] 07/7/2022 13:33

I wonder if Plus500 could experience a slow down due cost of living crisis?
I know not necessarily evident with last trading statement but Entains results got me thinking this morn

[oi_oi_savaloy] 07/7/2022 12:02

Thanks Djok - appreciate the info :)

[djokovic1] 07/7/2022 11:56

No, they are long AO world. AO world stock price went down from 70 to 40 this week. 2 things likely happen then:

i) Plus becomes a bigger position in Odey's portfolio if they do nothing as AO world becomes smaller. So they have to sell Plus to keep it under their max 10% fund limit.

ii) AO World did a capital raise which Odey took part in. Odey added to its AO World position by £4m. They have to get the capital from somewhere and part of it could have been funded by sales of Plus

[oi_oi_savaloy] 07/7/2022 11:02

so odey sold Plus (£4mill's worth) to use to short AO World?

[djokovic1] 07/7/2022 09:51

Also related to that AO world had a sharp price drop on Monday, so Odey may have had to sell Plus to stay within position limits...just a hunch

[djokovic1] 07/7/2022 09:11

My guess is the sharp drop on Monday was Odey selling Plus to raise capital (~£4m) for the private placement in AO World which they also own.

[wildchild] 04/7/2022 10:44

Sorry, my fault. I bought some at 1672 the other day. I have the kiss of death at the moment !

[beergut] 04/7/2022 10:31

The drop means the company can buy more shares for less.

[aleman] 04/7/2022 10:27

Shares back to where they were 6 weeks ago when the company said this:

Further to the Group's AGM trading update on 3 May 2022, trading in Q2 2022 to date has continued to be very strong, supported by current market conditions. Consequently, the Board has increasing confidence around the Group's performance for FY 2022, and therefore anticipates that Plus500's revenue and EBITDA for this year will be significantly ahead of current market expectations

[rhatton] 04/7/2022 10:25

IG and CMC basically flat on the day. No news from either

[oi_oi_savaloy] 04/7/2022 10:23

What are CMC and IG doing? If they have dropped a little bit you can guarantee that Plus will have dropped harder. It seems that anything in the sector is magnified (for better or worse) when it comes to Plus. (sorry, bit jaded here, glass always half empty with me).

[rhatton] 04/7/2022 10:17

Anyone with an theory on the drop with pre close trading update on the way in the next week or so?

[sailing john] 20/6/2022 08:37

Added - pretty easy to buy volume currently - now overweight
I'm hoping price being held back by general market malaise and results will change that!
GL SJ

[barryharmer] 16/6/2022 15:01

Eggbaconandbubble, the more they expand, the higher the need for cash in the bank, even though they do lay off trades to reduce exposure, they are still fundamentally bookies, and have to have a cash reserve to pay out the punters if they take a hit. The target return to investors via divi and buyback has been reduced to 50% from 60%, but they has given a special divi to raise the % even higher - one year I think 97% of profits after tax was paid out by declaring a bumper special divi. Once the expansion start to filter down to the bottom line we should be back to stellar dividends.

[base7] 16/6/2022 12:57

The latest trading statement ,16/5/22, stated that the expectation is for trading in FY22 to be significantly ahead of expectations & it is very bold to make that statement less than 5 months into the year.As it was made only 4 weeks ago it must be fair to assume that our first half will have been very strong, resulting in increased dividends & a further continuation of our share buy backs-supported by bank balances which could be approaching $1bill by the year end ( & the $ is unlikely to weaken v £ any time soon ).In volatile times I am happy to be invested here & Plus has been more stable than many others in my portfolio & pays a very decent 9 & growing dividend)

[planelondon] 16/6/2022 10:16

Eggbaconandbubble, the company is in the process of undertaking an enormous investment programme for future growth by way of enhanced marketing spend, buy backs and balance sheet building to support its USA futures and options clearing business ambitions. This combined investment over a three year period is nearing a billion dollars. In turn, this has reduced margins and impacted what was an exceptionally high dividend yield, supported by a low multiple. The success of this ongoing investment strategy is now beginning to become evident in the share price.

Djokovic1, this looks most likely. It’s difficult to see how Q2 is going to be worse than Q1. The late March Q1 rally across all asset classes meant the starting point for Q2 customer trading was ratcheted up to relatively high levels. Bitcoin in particular. Plus500 have historically had very strong quarters when crypto has fallen by 50% in the period.

[oi_oi_savaloy] 16/6/2022 09:23

I think they've said they'd hold back divi for potential acquisitions.....but that's a bit vague and I can't remember exactly when that was said. They used to announce v v good divi's in the dim and distant past. I prefer divis to buybacks if I'm honest. Even if buybacks enhance the divi going forward.

[djokovic1] 16/6/2022 09:04

I would put my money on Q2 being stronger than Q1..lets see if that comes true

[mister md] 15/6/2022 15:46

good point - every time I consider making a top-up investment here to benefit from the tasty dividend yield I realise it's not that tasty (anymore)