Plus500’s 40% stock price dive batters backers

High-profile investors including Crispin Odey took a battering on Tuesday as financial trading firm Plus500’s shares slumped as much as 40% on a shock profit warning.

Odey, whose fund is the biggest holder in the Israeli-based firm with a 7.5% stake, was the biggest casualty as the stock tumbled 628p to 1000p at one point.

Other major investors, including BlackRock and Invesco, also nursed wounds as Plus said profits would be “materially below” expectations this year.

But Plus is also the one of the most-shorted stocks in the FTSE, with 10% of its stock on loan, so hedge funds including Sessa Capital and Rubric Capital Management were counting their winnings.

Plus is the UK’s biggest provider of trading in contracts for difference, which allow punters to take leveraged bets on stocks, indices and currencies. But CFDs have been subject to a major crackdown by regulators since last August, hitting the major providers and slowing customer growth.

Plus has grown customer numbers since the end of 2018 and almost doubled underlying profits to $506 million (£392 million) last year, aided by factors such as the cryptocurrency boom. Alongside its commission revenues it also won $172 million from its customers, compared with a $102 million loss in 2017, as clients called the market collapse wrong at the end of last year.

It is expecting the European crackdown to dent revenues, but maintaining its marketing spend, some $125 million last year, will deal the severe blow to profits. The City slashed consensus profit forecasts down by almost $100 million to $263 million this year.

Chief executive Asaf Elimelech insisted: “The business is very strong, sustainable and we have good KPIs from a customer point of view.” The firm could also opt to buy struggling rivals.