CEO David Zruia confirmed to the Standard that Plus500 was thinking of listing its shares in the US alongside London, after reports in May that the business was looking to join firms like Arm, CRH and Flutter that recently expressed plans to sell shares in New York.
“We estimate that the valuation would be higher within US exchanges,” he said. “It’s something we’ll consider when market conditions are better.”
“The main point here is that we are a technology firm but we are not valued as a tech firm. We are valued as a financial services firm which is not really accurate. In the US we can see tech companies getting much better valuations.
“I think that once, or if, we’ll be listed in the US we’ll be valued more.”
The City has tried to make efforts to convince more firms, especially those in the tech sector, to list their shares in London and stay there, with the FCA streamlining its listing rules and Jeremy Hunt announcing a change in how pensions will be encouraged to invest their funds.
But there has been little sign so far that these efforts have made a significant difference, as decisions are still driven by valuations thhat remain much higher overseas.
Last week, the discount for UK equities compared to those in other countries hit its widest on record.
The UK equity market discount has now moved to its widest on record vs Rest of the World, after a small reversal in 2021/22. Remarkable to think that prior to the Brexit vote UK equities traded at a valuation premium to the RoW. Higher cost of equity capital for UK plcs is one of… pic.twitter.com/KsHU9o8RrF
— Simon French (@shjfrench) August 10, 2023
It comes as profits for the first half fell by 44% compared to the same period of 2022, to $174.9 million (£137.8 million) as revenue fell by 278% to $368.5 million. But Zruia stressed that this was a rise on the second half of last year, after activity in early 2022 had been unusually high thanks to the pandemic day-trading boom.
“Active customer numbers are now stable after pandemic highs and new customer numbers are growing again,” analysts at Jeffries noted.
Despite the year-on-year drop, Plus500 bought back another $60 million worth of shares, taking its return to shareholders this year to almost $350 million. CFO Elad Even-Chen said the buybacks helped to address the fact management believes the stocks are undervalued.
Shares are up 65p, or 4.5%, to 1,496p today.