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It’s been a tough couple of weeks for the Plus500 share price – aside from a straightforward AGM announcement yesterday nothing else to report since the strong Q1 trading update in early April.
I have updated some of the figures in the above post based on the closing price today of 551p (down from its recent high of about 700p).
Note: the Stockopedia PE of 13.3x (forecast rolling 12m) only seems to take the 2014 earnings into account. Given we are in May and there is expected growth for earnings next year this will overstate the PE multiple compared to a true Next Twelve Months basis i.e. 13.3x vs. 12.0x.
The discount to IG has widened considerably as the multiples for IG have hardly changed.
Not sure where else you can buy the growth, margins and cash generation that Plus500 has at this sort of valuation range.
To be in line with IG Group would now require a share price of c. 993p (same methodology as above) - this is now c.80% above the current share price.
I sold out my position a couple of weeks ago at 580, I couldn't find strong reason for the drop either. So I went digging elsewhere.
In the end I found two things that made me uneasy about continuing my investment. They are both anecdotal evidence rather than hard facts, but might warrant further investigation for someone who wants to continue their investment.
The first one is that whenever I wanted to look up a stock on their site, I couldn't find it.
The second thing is from googling user reviews, I found people commenting that they seem to manipulate things to be more in their favour. Also allegations that they close our positions that are profitable.
Its obviously pretty serious if they are doing this kind of thing. They do have a FSA fine from Oct 2012 for failing to report "reportable transactions in a timely and accurate manner".
I was checking them out as a possible CFD customer and I found that their tradeable list of shares is rather slim (or so it seemed from the list I saw).
Furthermore it bothered me that 'there are no commissions' on the trades -- anyone mature enough knows that there is no free lunch. Sure, as they seem to be very profitable from a shareholder point of view (I quite liked the amount of dividend they provided), if the profit is based on non-ethical approaches (I know nothing just rambling on the previous comments); I don't think it's sustainable. I am feeling the weakness so I sold out my holdings weeks ago. (Disclaimer: these are just non-fact based opinions of mine)