Plus500 Share Discussion Threads

[djokovic1] 19/4/2020 11:33

I think that's a fair comment JW

[fxprotrader] 19/4/2020 11:14

JW. You cant compare IG or CMC, theyre good decent businesses.

How many times do i have to tell people this!

[jw330] 19/4/2020 10:52

I have looked at both cmcx and ig and no doubt this company uses capital most efficiently out the three. The business model currently works but I do think they may need to educate the users a bit more to reduce churn and drive loyalty. After all if the current users feel like it's a 'scam' and leave bad reviews it is detrimental to the business. This kind of business is only built on trust, even though the odds of making money is low.

[djokovic1] 19/4/2020 09:35

I think the odds of winning/losing on leveraged trading platforms are similar across players. In other words, none of them are operating unfairly or doing anything malicious. The problem is lack of client understanding

[jw330] 19/4/2020 09:18

Thanks guys for the explanation. I keep an eye on Googletrends and thought I saw that interest in trading212 was going up faster but I checked again this morning and it seems to be similar in popularity. I don't use the app but my major concern was if this casino was stacked too against the players they would stop using it.

[djokovic1] 19/4/2020 09:04

JW,

The negative reviews generally are due to customers losing money, which is a reality. Clients who use leveraged trading providers (IG, Plus, CMC) 70-75% of them lose money. I think the best analogy is a casino, yes the house always wins.

I personally have used their app, and haven't noticed any issues. The issues stem from customers not understanding what they are doing. For example a recent review on Trustpilot complained that the price of Oil went from $19 to $25, the client was long, and they did not realize the benefit of the price rise and were charged an adjustment fee of ~$3500.

Well this person doesn't realize that oil trades on futures contracts to different months and the prompt contract was trading at $19 and the next month at $25 and they got rolled over when the prompt contract was expiring so of course they shouldn't realize any gain.(Oil is currently in super contango i.e forward contracts are trading well above spot prices)

My view is that the negative reviews are gripes from people who lost money and/or don't understand how some instruments work. But importantly I personally havent found anything wrong with the Plus500 platform / customer service. These low value/novice clients will churn, but that is expected.

[markbelluk] 19/4/2020 08:53

"Trading212 seems to be growing at a much faster pace due"

Can I ask what you base this statement upon. Especially when you consider the facts we know about PLUS's customer base expansion - " Company nearly doubles its customer base in Q1", "the number of active customers jumped to 194,024 from 97,921."

[jw330] 18/4/2020 21:21

Guys I agree with all your fundamental analysis and hold a position here. I am concerned about the poor reviews it has received on their app store recently. Their proprietary tech seems to work a bit too well and keeping the punters from continuing to try their luck? I am concerned by competitors such as trading212 offering cfds as well. Trading212 seems to be growing at a much faster pace due to their isa portion of the business. Could this be a problem for plus500?

[markbelluk] 18/4/2020 08:46

Totally agree DJ

In fact I only now hold PLUS, every other share has been cashed. I still think the main crash is yet to come

[fxprotrader] 18/4/2020 08:15

rackers hasnt noticed any difference since lockdown. Always sits alone in his tent

[djokovic1] 17/4/2020 22:49

Thanks for your estimates SJ. I can't say I disagree with your numbers but I do think there is uncertainty w.r.t how many actives stay on or even better get added to the current number and also how volatility plays out.

In general, I am in agreement but a bit more conservative on Q2 and 2H of 2020 as I think Vol will keep trending down from now on but who knows for sure!

That being said, Plus is 80% of my portfolio, and I think the margin of safety and potential upside at this price is very attractive regardless of what markets do over 2020/2021

[racksisthedon] 17/4/2020 20:29

www.elcapcatchcovid.com

[sailing john] 17/4/2020 14:45

rH - Yes but just dampens 2021 imo. I put 2021 in for completeness and as a comparison to 2020 - obviously at the moment it is a bit of a guess but I doubt it will be lower than my forecast and could be a lot higher if CV19 continues to dominate markets.

[rhatton] 17/4/2020 14:41

Thanks Sailingjohn great research as usual! Does any of that factor in a possible Australian regs etc?

[sailing john] 17/4/2020 14:22

Aleman - good to see you have found Plus recently. I've been in and out of PLUS several times over the past 5+ years having initially invested soon after the float at below 200.

As most here will know, I model on a cautious basis and actual usually above where I model. I find it is best to make my investment decisions based on cautious view of expectations especially as Mr M doesn't appear to be able to get his head around the business model and give a fare valuation. Even Brokers have often significantly underestimated Revenue and profit. But that provides an opportunity for investors.

By way of example I have copied below an old post from 2017 where I compare Broker Forecasts with my model and the out-turn for the year. I think 2020 will be similar with continual Broker upgrades - in 2017 price went from 400 - 1000 over 12 months.
My model was pretty much in line with FY from August but Brokers couldn't keep up with events (TSs and 1H Results).

These are the Broker forecast PAT for FY17 - always behind the curve as at:-
April 17 £58m (vs £87m from my model)
July 17 £75m (vs £100m from my model)
Aug 17 £110m (vs £148m from my model) (Note 1H actual £70m)
Oct 17 £118m (vs £155m from my model)
Nov 17 £129m (vs £151m from my model)
Actual was circa £155m