Broker Plus 500 makes a fortune as punters lose on stockmarket bets

Plus 500, the financial betting company, today emerged as the clear winner from the markets meltdown with a profit surge of 1836% as customers piled in and lost record amounts gambling against price falls.

The trading platform set up by five Israeli friends offers contracts for difference — bets on a price going up or down — on a range of stocks, indices and commodities.

As with other players in the market, volatile trading conditions have sparked a surging interest among the general public.

In normal trading conditions, Plus 500’s trading book evens out at around zero, with the company making its money on the spreads between the buy and sell price and charges for holding positions open overnight.

However, in the past three months, as revenues increased nearly fivefold to $316 million, some $82 million, or 26%, was from punters losing. Most of the customers’ losses were from mistakenly betting markets would not continue falling.

The volatility attracted more new customers and average deposits per client increased from $2153 to $3595 on a year earlier. Underlying profits for the quarter leaped 1836% on a year earlier to $231.6 million.

Profits for the year will significantly beat expectations, it said, repeating its pledge that 60% of net profit would be returned to shareholders.

European regulators in 2018 limited the amount of debt clients were allowed to use to trade due to the risk of huge losses.

Plus 500 is also expanding in other markets not affected by the curbs such as Singapore, South Africa and Australia, although Australia is poised to bring in restrictions.

On average, 80% of investors betting through the Plus 500 platform lose money.

Shares, already up 50% since March 16, gained a further 4%, or 46.5p, to 1154.5p.

Co-founder Alon Gonen owns nearly 5% of the company, currently worth £63 million.

Other CFD platforms such as IG Index and CMC Markets have also performed well during the crisis but they also offer other products, meaning Plus 500 has outperformend them.

Plus 500 pointed out that it can lose as big as it wins if bets don't go its way, such as during the inflation of the bitcoin bubble.