On January 3rd, 2018, the share price of Plus500 jumped more than 20%. This came about after the company announced that its yearly profits would be more than the expected. The company’s interest in the cryptocurrency market also contributed to its stellar performance.
Plus500 Ltd has its headquarters in Israel. It has subsidiaries in Cyprus, the United Kingdom and Australia. The company is authorized and regulated by the Financial Conduct Authority (FCA). It is also authorized and regulated by the Cyprus Securities and Exchange Commission. Indeed, Plus500 has numerous regulations which serve as an indicator that customer funds are secure on the platform.
The performance of Plus500
While making the announcement on January 3rd, Plus500 said that it had achieved record revenues in the last quarter of 2017. It added that the full-year revenues and profits would certainly be higher than what analysts had predicted. Strong volumes in the contracts-for-difference (CFDs) which are based on cryptos helped improve the results. Unlike Bitcoin and many other cryptos, Plus500 uses CFDs. The CDFs track the price of an underlying asset and allows an investor to leverage their bets. In return, this magnifies gains or losses.
On January 3rd, the share price of Plus500 hit a high of £10.79. In the past 12 months alone, the company’s stock grew by 170%. Despite the company having introduced the crypto-CFDs in 2013, it was only recently that the product became very popular. Investors started looking for ways to bet on the soaring prices. It is good to note that Plus500 growth is due to the current momentum in the crypto market. In the past three months alone, Bitcoin’s growth has more than tripled. In fact, the cryptocurrency market is now valued at over $978 billion.
The future of Plus500
According to Asaf Elimelech, the CEO of Plus500, with the increased interest in the company’s crypto-CFD offering, momentum in the business has continued to be strong. A record new and very active customer numbers have also contributed to the growth. In a post-close trading update, the company said that in 2017 alone, it attracted more than 240,000 new clients. This is a gain of more than 23% over the previous year.
What authorities say
It shouldn’t pass us that the UK and the EU have said that leveraged trading of crypto-based derivatives poses ‘significant risks’. The volatility of crypto and the immaturity of the marketplace were some of the reasons which the EU and the UK point at. In December, IG Group of the UK temporarily suspended trading of some Bitcoin derivatives contracts. The group cited security risks associated with holding cryptocurrency. IG Group is the UK’s largest online trading platform by market share. However, it remains to be seen what effect the US government controlled CBOE and CME’s entry into the crypto market will have on the resolve of European’s governments.
How will 2018 look like?
In December, the EU proposed some tough laws aimed at cryptocurrency market. The laws included how much an investor can borrow to leverage their bets. This would in return hit companies’ revenues. According to analysts at Liberum, Plus500 should further monetize its crypto traffic in 2018. This should be done by cross-selling these newly acquired customers other products.