10 June, AtoZForex.com Lagos — Following the barrage of issues facing Plus500, most notable of which is the freeze of customer accounts by the FCA. The company’s problems run much deeper than realised considering that Plus only managed to retain 35% of the 86,000 people who made a trade with the company during 2013. This makes the company’s business model questionable.
The latest update on the company’s situation is a report on the recent client metrics. Plus500 reported that 10,147 customers have updated their identification documents to reactive their accounts. Also, about 8,457 have been reactivated since it began overhauling regulation. Of the reactivated accounts, only about 5% of the clients, precisely 457 decided to withdraw their funds. And 61% of those who have been unfrozen have started trading again. The company still has at least 14,000 frozen accounts, clarifying today that 23,000 people have logged in to the site since the account freeze began in the middle of last month.
As Plus500 retains large number of clients after accounts are unfrozen, CEO Gal Haber said today: “We have made progress in re-approving customer accounts during the last week and as a result expect a majority of clients who have completed the remedial AML procedures to be unfrozen within the previously expressed timeline. This will be followed by contacting inactive customers.”
Following playtech’s bid to successfully acquire a controlling stake in the ailing Plus500, the agreement reached by the board of the companies values the broker at 400 pence per share in cash. This puts the eventual valuation of the company at £459.6 million, which is almost half the value of the company about two weeks ago. The cost of acquiring each client doubled to $1,120 during the fourth quarter of 2014, compared to $542 in the previous year. Average revenue per user only increased by 30%, from $1,011 to $1,315 over the same period.
This no doubt looks like a good buy for Teddy Sagi considering the opportunistic offering of £459.6m — equivalent to 400p per share — for Plus 500, which is little more than half May’s all-time high of 781p. Better still, in worst case scenario, Playtech can still cut its losses and walk away from the deal before its completion, which is currently scheduled for September. If the general situation deteriorates, and Plus 500 is forced to undergo another round of regulatory compliance tests, either in the UK or in other jurisdictions, Playtech could decide not to forge ahead.