Crypto Mania and Spanish Soccer Are Winners for Plus500

  • Trading platform more than doubled new customers in 2017
  • Shares have soared despite regulatory clampdown in sector

Malaga's defender Roberto Jose Rosales, left, vies with Atletico Madrid's forward Diego Costa during the Spanish league football match at La Rosaleda stadium in Malaga on Febr. 10, 2018. 

Photographer: Jorge Guerrero/AFP via Getty Images

Cryptocurrency mania and a sponsorship agreement with Spanish soccer club Atletico de Madrid are proving to be a winning combination for online trading firm Plus500 Ltd.

Shares rose as much as 12 percent Wednesday, adding to gains of more than 200 percent since the start of 2017, after Plus500 reported that new customer additions jumped 136 percent last year. More than 60 percent of new clients joined in the fourth quarter, the Haifa, Israel-based firm that’s listed on the London Stock Exchange, said in a statement on Wednesday. Full-year profit jumped 70 percent, it said.

Crypto Effect

Trading platform Plus500 added more users in 4Q 2017 than in the whole of 2016

Source: Plus500 financial statements

The spike in interest in cryptocurrencies was “a great marketing exercise” for the company, Chief Executive Asaf Elimelech said in an interview after the results. While users were enticed by digital currencies, 85 percent of revenue came from other asset classes, he said.

“When new customers came along to the Plus500 platform, their first position was opened on cryptocurrencies, but then they moved on to trade on the more traditional instruments like indices or commodities,” Elimelech added.

Plus500 -- as well as rivals like CMC Markets Plc and IG Group Holdings Plc -- allow users to speculate on financial markets through contracts for differences (CFDs), without owning underlying securities. The industry has been facing increasing scrutiny from European regulators, given that it exposes clients to potentially huge losses, as borrowed money can be used to magnify the size of bets.

Read: Why Contracts for Difference Are Under Scrutiny: QuickTake Q&A

Despite a tougher regulatory environment, Plus500 has consistently demonstrated an ability to increase its customer numbers and revenue per user, Liberum analyst Jamie Donald said in an email. The trading platform has already faced new leverage and advertising restrictions for its operations in Cyprus, giving it more experience of dealing with new regulations than rivals, Donald said. Liberum is Plus500’s corporate broker.

Plus500 recruited 80 additional employees in 2017 to prepare for regulatory changes, but doesn’t expect clampdowns proposed by European regulators to have a material impact on its outlook, particularly given its diversification of licenses across several countries, Chief Financial Officer Elad Even-Chen said.

The company recently received operating licenses in South Africa and Singapore, adding to its existing operations in U.K., Australia, Cyprus, New Zealand and Israel.

Atletico de Madrid

Plus500’s growth in European users has also been helped by its sponsorship agreement with Spanish soccer club Atletico de Madrid, according to Elimelech. The partnership, first announced in 2015, was extended through to the 2020/2021 season in November.

The tie-up comes at an exciting time for Atletico: The team sits 10 points ahead of rivals Real Madrid in La Liga, and it has a new 68,000-seater stadium that will host the UEFA Champions League final next year. All of this means more exposure for Plus500.

“The team’s success over the past few years was a key motivation for the partnership,” Elimelech said. “Plus500 is often now the first trading platform on the minds of potential customers in Europe.”

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