Shares of FCA regulated online Forex and CFD broker, Plus500 (PLUS.L), continue to fall today following yesterday’s plunge. At a low of 345, shares fell 5% today, and have fallen over 100p since Friday’s high. No specific news has been attributed to the fall, but the broker has been the target of skepticism in regards to their accounting and authenticity of their results.
Most recently, Plus500 issued its Q2 2014 Trading Update where they forecasted that profits and revenues would be above expectations. The optimistic talk occurred even as they stated that Q2 had been slower. Overall though, the positive forecasts did little to halt a multi-month downtrend in shares of Plus500 which had peaked at 707p in mid-April, but have since been halved.
Fundamentally, despite gaining demand for their shares from retail traders and asset managers, supply in stock has risen following sales from insiders earlier this. As a result, the current decline may have more to do with momentum buyers having exited the stock, being triggered by selling taking place after the price of shares dropped below June’s lows yesterday. Similarly, window dressing from asset managers as they remove underperformers from their portfolios before accounting periods, such as end of the year or quarters, may have attributed to June’s decline from just below 600p to a low of 430p taking place in the quarter.
In terms of statements from the broker, Plus500 released a public statement stating, "It doesn't know of any operational or financial reason for such weakness." The company also reaffirmed its previous position that Q2 revenues and profits are ahead of expectations. Following the statement, shares rebounded to a current 365p, still slightly lower on the day. While future performance of their shares remains in debate, the share weakness appears to have led to at least one value-based fund manager taking advantage of the depressed shares. Announcing an increase in ownership today is Odey Asset Management, which stated that it has increased its ownership of Plus500 shares in its Absolute Return Fund. Among all its funds, Odey Asset Management now holds 12.9% of Plus500 shares, in both the form of ordinary shares and CFDs.
