CMC Markets stock hits 6-month high after raising profit forecast

CMC Markets PLC (LSE:CMCX) shares jumped by as much as 25% on Monday after the broker announced an increase in its annual operating income forecast, citing a recent uptick in market volatility as a key driver.

CMC Markets highlighted an “improvement in market conditions” and rising demand from both retail investors and institutions as the primary reasons for this positive outlook. The company now expects its net operating income for the full year to be between £290 million and £310 million, up from the previously anticipated range of £250 million to £280 million.

David Fineberg, CMC’s Deputy CEO, remarked that retail investor confidence had seen an upswing following a surge in equity markets globally towards the end of 2023. This surge was fueled by robust economic data from the US, sparking speculations about potential interest rate cuts.

“Clients were moving back into equities and indices, and we’ve also seen movement in precious metals like gold bullion,” Fineberg added.

This optimistic forecast follows a challenging period for CMC, which reported an interim loss before tax of £2 million in November, a stark contrast to a £36.6 million profit in the previous year. The loss was attributed to a period of low market volatility. However, with shares trading up 25% to 136.45p, and a nearly 40% increase over the past month, the listed broker seems to be regaining its footing. Despite this, the company’s current valuation is still significantly lower than its peak during the retail trading frenzy in April 2021.

Albert Soleiman, the Chief Financial Officer, commented on the company’s recovery, noting, “As we entered the third quarter, our strategic diversification began to shine through along with positive equity markets.”

Earlier today, rival platform Plus500 also reported encouraging results. It announced full-year revenues of $725 million from trading fees and client interest. This resulted in a 5% rise in its share price and the return of approximately $350 million to shareholders through buybacks and dividends.

Founded by Peter Cruddas, a major donor to the Conservative party, CMC Markets offers trading in over 12,000 financial instruments including shares, indexes, foreign currencies, commodities, and treasuries.

The spread betting and online trading company reported a net operating income of £122.6 million for H1 FY 2024, reflecting a 20% decline compared to the same period last year when the figure stood at £153.5 million. The trading net revenue for H1 2024 was £87.4 million, down 32% from £128.4 million a year earlier. Additionally, investing net revenue saw a 20% decrease, reaching £16.8 million compared to £20.8 million in the previous year.