Bitcoin’s rollercoaster ride powers online trading firm Plus 500

Business News

Shares in Plus500 jumped more than 20 per cent on Wednesday after the online spread betting company said full-year profits would beat market expectations, boosted by rising interest in its cryptocurrency trading services. Plus500, which is listed on London’s Aim market, said that it had achieved record revenues in the final quarter of 2017 and that full-year revenues and profits would come in higher than analysts had forecast.

The results were helped by “strong volumes” in contracts-for-difference based on cryptocurrencies, it said. CFDs track the price of an underlying asset and allow investors to leverage their bets, magnifying gains or losses. Shares in Plus500 hit a fresh high of £10.79, and on Wednesday mid-afternoon were up nearly 22 per cent on the day at £10.73. The stock has surged around 170 per cent over the past 12 months.

The Israeli-based group introduced crypto-CFDs in 2013 but the products have grown in popularity recently among investors looking for ways to bet on soaring prices. Bitcoin, the most popular digital currency, has more than tripled in value over the past three months.

“Momentum in the business has continued to be strong with increased interest in our cryptocurrency CFD offering and record new and active customer numbers,” said Asaf Elimelech, chief executive. In its post-close trading update, the company said that it attracted around 246,000 new clients in 2017, up from 104,432 the previous year.

The trend reflects the hype surrounding cryptocurrencies, as rising prices have prompted bubble fears and drawn comparisons with the dotcom boom. Shares in rival Gain Capital have risen nearly 26 per cent since it said last month that it was launching new bitcoin derivatives products via City Index, its FCA regulated service in the UK.

Both EU and UK regulators have flagged “significant risks” associated with leveraged trading of cryptocurrency-based derivatives, highlighting the volatility of digital currencies and the immaturity of the marketplace. In early December, IG Group, the UK’s largest online trading platform by market share, temporarily suspended trading of some bitcoin derivatives contracts, citing security risks associated with holding the cryptocurrency. Plus500 said on Wednesday that it remained “focused on risk management”. The news also comes despite a looming regulatory clampdown on the online retail trading sector — expected to come into force this year.

Europe’s markets authorities proposed tough new rules on the industry in December, including restrictions to the amount investors can borrow to leverage their bets, that analysts warn will hit companies’ revenues. Analysts at Liberum, who upgraded their forecasts for Plus500, said they expected the company “to further monetise crypto traffic during 2018 by cross-selling these newly acquired customers other products”.