[On :Freetrade:] IG Group (IGG)

Any thoughts on IG Group? The chart would suggest a nice rise to come. I know they were impacted by ESMA controls which hit their revenues but forward look doesn’t look much lower than last year revenues. Last full year divi was 30.24p

I wonder how the likes of freetrade/ Robin Hood will eat into their business. I was paying £8 a trade and they introduced a monthly minimum if you were just holding

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Tell me about it. The custody fee just grates me.

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Likewise, I moved my ISA from IG to here due to fees. I still have a spread bet account there, seems to be about the only decent thing they offer now. I tried to setup a SIPP with and the Customer Services was awful. They couldn’t answer basic questions about the product… as it’s run by a third-party. Oh, and their Android app is just difficult enough to log into so as to make me not use it very often.

I like the Direct Market Access with IG. It can make a huge difference. Being able to buy on the bid and sell on the ask has saved me thousands.

I think these spreadbetting companies will do fine over the coming years in spite of the reduction in leverage offered to clients. I think this will have the effect of increasing the length of time clients remain solvent and allow them to build a more sustainable business with more repeatable revenue. Plus500 reported they had their lowest churn rate since IPO in their latest update.

The merits of their product and whether it’s appropriate for just anyone is a different debate. But I think theres plenty of appetite for the trading/gambling product they provide and the leverage restrictions mean people can afford to come back to the casino for much longer/perhaps indefinitely, even if they consistently lose money- meaning they may end up paying much more in fees than they would have had they had a disastrous loss of capital 1 week after opening an account with the high leverage previously on offer.

It’ll be interesting to see whether robinhood tries to appeal to this segment, seeing as they offer leverage and options in US. If they do, I’d expect it to be a situation where all market participants benefit due to increased awareness of the sector.

Plus500 usually issue an update around this time of year, will be interesting to see how they fare. These companies had an exceptional 2018, but much of this can be attributed to the one off benefit of bitcoin, which brought so many customers at such low cost to companies which typically spend $1,000 to acquire a customer. I think Plus500 share price in particular overshot last year and a drop was warranted, though now they look undervalued. They have around £230m in cash, will conservatively make £100m for full year 2019 after a poor first half though I expect it to be more, need little cash to run the business positioning themselves for a much bigger share buyback and are currently valued at ~950mish. I expect 2019 to be a relatively bad year being the first year with the leverage restrictions . I think each client is now worth more than pre leverage restrictions, the value is just extracted over a longer period of time and they may need to adjust marketing budget to reflect that. There’ll be some bumps in the road like the expected australian regulation limiting leverage in australia one of their fastest growing markets.

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The Group expects to report revenue and EBITDA for the year of approximately $354 million and approximately $190 million, respectively. The Board is pleased with this performance, reflecting a much improved second half compared to the first half.

Looks like ~140m£ in ebidta for the year, likely end year with around 260m£ in cash, market cap currently under 1bn, very undervalued.

As a comparison to Plus500 that @astonelesschip mentions.

This is the latest update I can find: https://otp.tools.investis.com/clients/uk/ig_group_holdings_plc/rns/regulatory-story.aspx?cid=2458&newsid=1350393

  • Net trading revenue in H1 FY20 is expected to be around £250 million, compared with £251 million in the same period of the prior year.
  • Revenue in the Group’s core markets in H1 FY20 is expected to be around £210 million, 6% lower than in the same period of the prior year.
  • IG is scheduled to announce its H1 FY20 financial results on 21 January 2020.
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IGG is thriving. During extreme volatility is when they make most of their money, from their spread bets and CFD products.

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Plus500 is more attractive to me, much lower p/e. Big director buying in last few days also. They provided a trading update a few days ago guiding to significantly higher reveneue compared to this quarter last year. I’m somewhat wary of australian regulation changes lowering leverage which may be announced any day. In the mid term lower leverage is good imo, keeps customers ‘in the game’ longer thus increasing lifetime value, even if the value is recognised over 2-3 years instead of the 3-6 months it might take someone to blow an account with higher leverage.

I think if robinhood provide anything similar to the gambling like instruments they provide in USA it poses a big problem for these brokers- the user interface is poor on plus500/IG and customer acquisition cost consistently high.

I got an ad while browsing, and it looks like IG started offering £0 trades for US shares.

It might be the first “incumbent” to do it.

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Key take-aways:

  • IG’s client number climbed by 21% to 101,700
  • Revenue up 29% to £139.8m in the three months to 29 February
  • Plus500 and CMC Markets reported robust trading as well

Share price is around £6.37, at a sort of mid-point between the 52-wk high and low.

Dividend yield is 6.79%, but SimplyWallSt gives a risk warning on that.

I’m not seeing a director deal in the past three months:

Anyone looking at this stock?

The director buying comment was in relation to Plus500.


:freetrade: on its way to cross IG in number of users.