Publicly listed brokerage GAIN Capital Holdings, Inc. (NYSE: GCAP), the largest provider of retail FX in the United States, had a disappointing fiscal year in 2019.
GAIN’s net revenues under the US GAAP for Q4 2019 came in at $53.3 million, down 33 percent when compared with $79.9 million in the same quarter a year ago. Furthermore, the year ending December 31, 2019, netted a revenue drop of 35 percent year-over-year, having plunged to $234 million from $358.0 million reported back in fiscal 2018.
The company’s CEO suggests that an unusually low volatility environment last year hit its fortunes and resulted in lower activity across the markets, which led to its disappointing numbers.
The bottom line figure was downbeat across both the quarterly and yearly timetables, showing a net loss swollen to $31.2 million for the fourth quarter vs. $0.7 million in Q4 2018.
Furthermore, the full year’s figures reflected a bleaker performance after yielding a net loss of $60.8 million, or $1.63 per share, compared to net income of $28.0 million, or $0.60 per share in the year ending December 31, 2018.
Despite the weak financial results, GAIN Capital stock is still up by over 66 percent after news about an Acquisition offer from INTL FCStone started making rounds in trading circles this morning.
The transaction is set to be completed in mid-2020, subject to approval by GAIN’s stockholders and regulators, as well as other customary closing conditions.
According to Glenn Stevens, CEO of GAIN Capital, in a statement on the results: "2019 will be marked as a year of multi-decade low Volatility , or in some cases, such as Eurodollar, all-time lows, which understandably had an adverse impact on GAIN's financial performance. Despite that, our focus on organic growth saw good year on year improvement in key underlying client metrics, with new direct opened accounts improving 67%, Retail client equity 12% higher and 3-month direct actives increasing for a fourth consecutive quarter to finish 13% above Q418. As such, we remain well positioned to capitalize on increased volatility upon the return of more normal market conditions."
