Mobile Trading Strength And Expanding Non OTC Platform Will Support Long Term Upside Potential

Catalysts

About Plus500

Plus500 is a global multi asset fintech group that provides market infrastructure and proprietary trading platforms across OTC, futures, options on futures and share dealing.

What are the underlying business or industry changes driving this perspective?

• Expansion of non OTC products, with non OTC revenues at approximately 13% of group revenue in the first half of 2025 and management aiming for more than US$100 million of non OTC revenue in 2025, points to a broader earnings base that can support total revenue and smooth profit volatility over time.
• Rising importance of global futures markets and Plus500's role as an infrastructure provider, including ownership of a U.S. FCM, membership of multiple major clearing houses and the expected addition of six exchange and clearing memberships in India, supports higher customer segregated funds and fee based revenue.
• Growing customer deposits and client quality, with total customer deposits of US$3.1b in the first half of 2025 and average deposits of about US$17,000 per active customer, provide a larger capital base on which to generate trading revenue and can support EBITDA and earnings resilience.
• Ongoing shift to mobile trading, with 89% of OTC revenue and 84% of OTC trades coming from mobile or tablet devices, aligns Plus500 with long term customer behaviour and supports both revenue and net margins through scalable proprietary platforms.
• Global regulatory footprint, including 15 regulatory licenses rising to 16 with Mehta Equities and a new Canadian license, together with a strong cash position of about US$938 million and no debt, provides room to expand into new regions and products in a way that can support future revenue and earnings growth.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Plus500 compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Plus500's revenue will grow by 3.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 36.0% today to 35.7% in 3 years time.
• The bullish analysts expect earnings to reach $311.3 million (and earnings per share of $4.91) by about August 2029, up from $281.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.7x on those 2029 earnings, up from 12.7x today. This future PE is greater than the current PE for the GB Capital Markets industry at 12.4x.
• The bullish analysts expect the number of shares outstanding to decline by 1.58% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.26%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Plus500 is putting increasing weight on non OTC futures and clearing activities, including a target for more than US$100 million of non OTC revenue in 2025, and a large pool of customer segregated funds. Any structural reform in key derivatives markets such as India, or tighter global futures regulation that limits leverage, product availability or intermediaries like introducing brokers, could cap trading activity and fee income, putting pressure on revenue and earnings over the long term.
• The futures business model in the U.S. and India relies heavily on introducing brokers who bring hundreds or thousands of end clients at a time. If this distribution channel faces regulatory constraints, consolidation or shifts to competing FCMs and platforms, Plus500 could see slower growth in customer segregated funds and transaction volumes, which would weigh on fee based revenue and EBITDA margins.
• Customer retention and lifetime value are currently helped by long tenure, with 84% of OTC revenue from customers with more than one year on the platform and 47% from customers with more than five years. If trading behavior changes with lower retail activity, alternative platforms or stricter rules on marketing and customer acquisition, the company could see lower activation and monetization of its 32 million registered customers, which would affect revenue durability and earnings visibility.
• The business has been built around high mobile engagement, with 89% of OTC revenue and 84% of OTC trades coming from mobile or tablet devices. Any long term shift in user preferences, new mobile competitors or tighter rules on app store distribution, data usage or mobile marketing could increase acquisition costs and reduce trading intensity, pressuring net margins and cash generation.
• Plus500 operates with 15 regulatory licenses, expected to rise to 16, and holds a very large cash balance of about US$938 million with no debt. This expanding global regulatory footprint also increases exposure to changes in local rules, higher compliance costs and potential capital requirements that may restrict how much surplus capital can be returned to shareholders, which could limit future earnings per share progression relative to expectations.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Plus500 is £55.04, which represents up to two standard deviations above the consensus price target of £47.63. This valuation is based on what can be assumed as the expectations of Plus500's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £55.04, and the most bearish reporting a price target of just £34.77.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $870.9 million, earnings will come to $311.3 million, and it would be trading on a PE ratio of 20.7x, assuming you use a discount rate of 9.3%.
• Given the current share price of £38.26, the analyst price target of £55.04 is 30.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.