The revenues of the Plus500 broker have dropped by as much as 40%. Guilty of ESMA?

Plus500, a company listed on the London Stock Exchange (LON: PLUS) and one of the largest retail CFD brokers, recorded a 40% decrease in its revenues in the third quarter of this year. Revenues were "just" $ 3 million.

Effects of ESMA restrictions

Such a clear drop in the company's results is identified with the ESMA guidelines, which came into effect from 1 August 2018. It can be assumed that the fourth quarter will look even worse due to the fact that in the third quarter only 2 from 3 months include the leverage cuts to the maximum 1 altitude: 30.

Analyzing the broker's results, you can see a significant decrease in revenue per individual customer. In the third quarter of this year it amounted to 981 USD, while in the corresponding period a year ago it was up to 1232 USD. At the same time, the cost of acquiring one client is more than doubled.

Plus500 financial results for the quarter

A professional client is a valuable customer

The company's report also includes information that 8% of European clients received the status of a professional client. At the same time, this small group of traders corresponds to 38% of Plus500 revenues in Q3 (4.75% revenue on 1% of professional clients). At the end of the second quarter of professional clients was 5%, and the revenues they generated for the company were 20% (4% revenue on 1% professional clients).

Customer statistics at Plus500

Since August this year, the company's share price has fallen by around 700 GBP, or over 30%.

Full Plus500 report