RE: #deleterobinhood31 Jan 2021 13:39
Great that Plus might attract a large new customer base from Robinhood and other platforms/brokers. As we saw in Q2 20 with VIX trading above 25 and active users doubling Q on Q Plus500 did brilliantly.
However, as discussed time and time again on this board, Plus500 don't hedge (expensive and unwarranted in normalised markets) so they are exposed to surging prices if the Reddit effect were to hit. Bitcoin and Silver are obvious markets where Plus500 may take book losses.
However, I am buying more Plus500 on the basis that they are clever people with highly sophisticated proprietary technology and risk management systems. They have seen what has happened in the US and should have taken all necessary precautions to protect themselves in key markets.
If this was on 20x and the end market was shrinking I might worry. But, its on 5x and the end market is expanded rapidly (as shown in the US). If they can avoid surge markets and heavy book losses this is one of the cheapest shares I have seen in a long time.
ps. I revisited the last earnings call with the CEO and FD in the summer. The thing that surprised me was that after a period of exceptional /all-time record growth there were only two questions after the call and from what I gather a very small audience on the call. ps. both questions were from brokers/research providers and were pretty fluffy.
Bottom line - no one follows this company at the moment .
The IR guy seems decent and has a good CV but for one reason or another its off the radar.
Markets are frothy, valuations are high and investors are desperately looking for good value growth names to buy into.
Plus500 is on a dirt cheap valuation (relative and in isolation), growing fast, loads of cash , paying a dividend, buying-back shares, in line for further VAT rebates in Israel, and also a brilliant hedge for when the wider economic reality bites, Governments turn off the stimulus tap and markets suddenly look over priced.
This is a very easy buy, if you can stomach what could happen in the short term with the social media names.
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