Plus500 Makes a Killing in 2016, May Include BO Soon?
This broker may specialize in forex trading, but they have been known to dabble in a variety of fields, including commodities, indices and even various derivatives like binary options (technically CFDs, but still…) – and by the look of things, 2016 has been very good for them. It seems all this volatility surrounding Brexit has really spiked the earnings of this UK-based broker, but where will their quest for growth lead them? Is it true that they might also incorporate binary options at some point in the future?
According to recently published reports, Plus500 has managed to rake up roughly 25% in sheer revenue growth, and has achieved a 40% operating cash flow increase in comparison to the same period last year. So what spurred this sudden growth? Could it be that Brexit alone could have caused all of this? Certainly not, as there are other brokers in the UK as well, and they haven’t been doing nearly as well.
And yet, the numbers don’t lie. This brokerage that is listed on the London Stock Exchange has just released their records for the first half of the year, and according to what they have shown, there is a significant increase in their number of customers.
The numbers are up 12% for active customers and 9 points in newcomers, which is pretty impressive all things considered. With this alarming growth rate and the constant need to enhance their offer, there are rumors that the inclusion of binary options on their list is only a matter of time. Considering the fact they have more than 100,000 active customers, even a fraction of them would make a significant driving force, possibly increasing their revenue even further. So far, however, the closest they came to holding binary options on their platform are CFDs, but Contracts for Difference and Binary Options are not quite the same thing, are they?
The Brexit Paradox
What came as the biggest surprise was that the bulk of this new business came around the same time the people in the UK were voting on whether they should stay in the European Union or seek their fortunes outside of this organization. Their unexpected decision, as well as the chaos that ensued on the financial markets should have crippled the number of traders as the majority of sane people would attempt to preserve the value of their assets rather than risk them.
On the other hand, the volatility that came with Brexit proved quite an opportunity for those who had the foresight to predict the reaction of the market to an unexpected event of such magnitude. As for the margins over at Plus500, even at the bottom line, aside from various costs, the EBITDAs were well over 50%. Another thing that this broker capitalized on was the ever-increasing number of people who tend to conduct their online trades via their mobiles and tablets. In the UK alone, these clients got them more than two third of their revenue.
According to the Chief Executive Officer of Plus500, Asaf Elimelech, this broker has managed to achieve record profit while keeping their existing clients active and managing to attract plenty of new ones as well. While customer activity in combination with specific market condition was the main driving force behind their success, Plus500 will certainly do everything in their power to maintain this growth rate for as long as possible, or even drive it further up. But will they reach for binary options as the next logical step, as the rumors indicate?
Conclusion: Rumors are plausible, but far from certain
While Elimelech did go on record and announced that Plus500 will “continue to invest in enchancing [their] business” so they would ensure future growth, there is no substantial evidence to suggest they are planning to include real binary options onto their platform. Of course, there is no evidence to the contrary either, but the possibility is certainly there. After all, there are only so many ways in which future growth can be delivered, and sooner or later, there will be binary options on their offer.
Overall, this momentum in all likelihood will not simply drop unexpectedly. It is expected to last for some time, making this year truly the year of Plus500 and other successful brokers.