Plus500 Share Discussion Threads

[chucko1] 16/3/2020 00:51

Djokovic, not on this forum. But full year EBIT consensus is $180m and this amount is likely, if not more, for Q1. Who knows how the remainder of the year will evolve, but I don’t expect low volatility as we saw last year etc. Far from it! Now the market may begin to appreciate what is possible with PLUS (and others) when financial markets trade with sustained volatility, rather than being pushed remorselessly higher by central banks’ easy money and an implicit put.

You might respond that money is now easier than ever - but not if you factor in the sudden headwind from COVID-19.

[fxprotrader] 15/3/2020 18:32

Lol. No chance

[djokovic1] 15/3/2020 17:34

Yes, given the volatility we have seen this quarter, I very roughly expect Q1 revenues to be close to 2x consensus around $180m which would already exceed the half year consensus estimates.

If you can share Chucko, where do you get the 4x of consensus estimate from?

[chucko1] 15/3/2020 16:04

But I must repeat - the best information is that to the extend they make/lose trading P&L, they lose/make spread p&l. The determining factor is market volatility, and we are in biblical territory.

One estimate is that their run rate this quarter is equal to the market expectation of their annual expected result. This may turn out to be crypto squared!

I expect Monday to be a very volatile day.

[markbelluk] 15/3/2020 16:04

Maybe some trades, but I think there will have been more punters short, so probably still well up overall even on Friday!

[djokovic1] 15/3/2020 14:59

Yeah the move has definitely caught me by surprise but it has always been a volatile stock. I think the selling is indiscriminate (not due to fundamentals) but due to fear and possibly the need for some institutional investors to generate cash.

I still have a strong view (and a sizeable position relative to my portfolio) that Q1 will be off the charts, which is when the stock will catch up with fundamentals. With regard to being on the wrong side of trades, that is always a possibility but I have been following their most popular instruments closely on a daily basis. They generally have an evenly matched book w.r.t equity indicies and FX. Clients were long Oil and Crypto which have crashed. So I would expect market PnL to also be positive, possibly significantly.

[basem1] 15/3/2020 13:50

Just wondering if they have been on the wrong end of some trades. The Dow was well oversold on Friday and look how it bounced 1500 points. £10 point is a £15k hit

[valentine73] 15/3/2020 13:46

Surprised Plus isnt buzzing on the volatility - would have thought it would be one of the handful of winners

[fxprotrader] 13/3/2020 19:43

i had hoped rackers had expired...oh well....not long

[basem1] 13/3/2020 08:55

Does the short selling ban have any implications for Plus ? Thanks in advance

[fxprotrader] 13/3/2020 07:48

You could try thinking with an open mind

[djokovic1] 12/3/2020 20:42

No problem Cfro, at times like these the best we can do is have fact based decision making prevail as opposed to fear and greed

[fxprotrader] 12/3/2020 13:58

idiot comparing IG to PLUS

[cfro] 12/3/2020 13:51

Nice research djokovic1, i hadn't thought about checking IG in 2009.

[fxprotrader] 12/3/2020 12:33

LOL well done ladies!

[djokovic1] 12/3/2020 11:03

For those who are worried about how a CFD / Spread betting firm would do through extreme volatility such as now, it is instructive to look at IG Group's accounts for 2009 (FYE May 2009). That years accounts covers the steep fall in the markets from the global financial crisis.

It's 2009 results were up ~25% (revenue and profit) on 2008 results and revenues/profits continued to grow in 2010 (clients did not stop trading post the GFC).

In terms of market PnL risk for Plus as they are mostly unhedged unlike IG, looking at their most active instruments on the app they seem to have a well balanced book between long and shorts on a lot of instruments. On oil majority of clients were long (and still long). So net I would expect market PnL to end up being additive to the increased commission PnL realized due to increased trading due to higher volatility.

[djokovic1] 11/3/2020 22:43

Yeah you are right Chucko. Casino's are never empty, except maybe now due to corona..:$

i) Speculators keep coming back, think of it as an entertainment tax. Quite similar to sports betting
ii) People forget the pain and have the urge to make it back..and also have overconfidence in their abilities so think they can make it back (I have been guilty of the same)

[chucko1] 11/3/2020 18:29

They’re never put off for life! They think they will be when tending the cuts and bruises, but there will be a time when they have lost their memory for the pain and believe it is “their time” again. It’s not just money for them - it’s fun as well.

But yes, they would be put off for a while, or until they have funds again.

Don’t forget that an increasing proportion of their clients are pros who will be mixed in their exposures. They would tend to be more balanced in their risks which is great as that would partially provide the natural hedge for PLUS. This is why the importance of new customer numbers in the previous results was misjudged by Canaccord and others. It’s the number of pros which satisfy the management of PLUS. Not for nothing they have been buying their own stock apace.

[cfro] 11/3/2020 17:33

Agree with you chucko1,

i guess one negative that i can see is that what would happen if we have a huge market crash and it wipes all their clients out? PLUS would obviously make shed loads of money but would they have any clients going forward? Many would be put off for life including many pro's.

[markbelluk] 11/3/2020 15:55

Lets not forget the re-introduction of the special D ;)

[chucko1] 11/3/2020 15:22

I do like the chart. Sold at 940p recently and bought back at 872p, sold at 895p and now bought again at 868p.

What I like about the chart is that is offers many trading opportunities on top of any fundamental belief in the business.

It is without serious doubt that the volatility is good for them, possibly in a very meaningful way. There is speculation that they may have taken client losses with this extreme volatility with the zero protection policy. If that were the case, it would be because punters were losing money, in which case Plus’s trading account would be hugely positive. All these negatives cannot reasonably coexist.

Additionally, as I have often argued, Plus’s trading gains and losses and profits from customer activity are somewhat awash, but higher volatility leads to substantially higher trading activity and spread and funding revenue.

This has only been for a month or so now, but could easily extend for many, many months with a close US election, coronavirus and oil shenanigans. So much to like here and results should be an interesting read. Abnormally large profits will allow further large share repurchases. In time, they can buy back an awful lot, and the chart has no knowledge of that!