| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 5/6 |
| Past Performance | 2/6 |
| Financial Health | 5/6 |
| Dividends | 0/6 |
FUTU Stock Overview
Futu Holdings Limited operates an online brokerage and wealth management platform in Hong Kong and internationally.
Rewards
Trading at good value vs. peer average Price-To-Earnings ratio
Risk Analysis
No risks detected for FUTU from our risk checks.
Futu Holdings Limited Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$38.58 |
| 52 Week High | US$93.50 |
| 52 Week Low | US$21.23 |
| Beta | 0.18 |
| 1 Month Change | -16.62% |
| 3 Month Change | -26.11% |
| 1 Year Change | -56.86% |
| 3 Year Change | 270.96% |
| 5 Year Change | n/a |
| Change since IPO | 151.83% |
Recent News & Updates
Futu Holdings Q2 2022 Earnings Preview
Futu Holdings (NASDAQ:FUTU) is scheduled to announce Q2 earnings results on Tuesday, August 30th, before market open. The consensus EPS Estimate is $0.56 (+24.4% Y/Y) and the consensus Revenue Estimate is $202.69M (-0.2% Y/Y). Over the last 3 months, EPS estimates have seen 4 upward revisions and 2 downward. Revenue estimates have seen 6 upward revisions and 6 downward.
Futu Holdings: Facing Strong Headwinds
Futu Holdings is now down almost 80% from its all-time high last year. The brokerage company is facing strong regulatory risks from the Chinese government and the SEC. The recent volatility in the financial market is significantly impacting the company's financials, with the latest quarterly report being very weak. Its internal expansion has been tough so far as it is facing strong competition in an increasingly saturated market. I rate the company as a sell. Investment Thesis Futu Holdings (FUTU) is a digital brokerage and wealth management platform based in Hong Kong and China. Futu and its subsidiaries provide investment services to individual investors through its one-stop digital platform. Its platform is known for its social features, which offer users a network that connects them with users, investors, companies, analysts, media, and key opinion leaders. Its primary fee-generating services include trade execution for stocks, ETFs, warrants, options, and futures, as well as margin financing and securities lending. The company has been performing poorly since early 2021. It is currently down almost 80% from its all-time high, trading at $41.6 per share. The massive drop in share price is due to the broad decline of growth stocks, worry of the SEC delisting Chinese companies, and the Chinese government possibly imposing stricter rules on financial companies. Despite being down a ton, I believe Futu is still not investable. Besides political concerns, the current volatility in the market is posting strong headwinds on the company, and it is facing intense competition while the industry is getting increasingly saturated. Recent financial results are also very disappointing with revenue decreasing. Therefore I believe Futu is a sell at the current price. FUTU data by YCharts Political Risks Regulatory risks are always a big concern when investing in Chinese companies. Last November, the Chinese government imposed a new personal data privacy law, aiming to regulate the export of personal data and safeguard its national security. The new law is likely to impact Chinese online brokerages like Futu and Up Fintech, as they help locals invest in overseas stock markets such as the US, which could violate the law. Futu is also facing de-listing risks from the SEC. In April, Futu was one of the latest five stocks that were added to the list of companies that may get kicked out of the US stock exchange. In late May, Chinese mobility company DiDi notified the NYSE that they are delisting from the US, and are planning to list elsewhere instead. The ongoing political issues are likely to keep posting unprecedented risks to the company, which creates huge uncertainty in the near term. Dire Financial Market The turbulence in the financial market over the last few months is significantly impacting Futu. The company heavily relies on trading volume, margin financing, and securities landing to make money, yet the recent volatility vastly reduced investors' appetite for trading and investing. The massive sell-off in growth stocks, crypto, SPACs, and meme stocks also wiped out a lot of young investors, which is Futu's core demographic. The overall market sentiment is very negative as we entered the bear market. A lot of investors are now inclined to stay on the sideline and wait till the dust settles before investing again. Leaf Li, CEO, on the market's impact "Total client assets declined 16.5% year-over-year and 5.3% quarter-over-quarter to HK$386.0 billion due to sharp mark-to-market losses of our clients' holdings. Meanwhile, market correction weighed on margin financing balance, though partially offset by increased securities lending activities." The gloomy sentiment is shown in the IPO market, which has been extremely quiet. According to FactSet data, 1,073 companies IPO'd in 2021, raising $317 billion, while in the first half of 2022, the total was 92 companies, raising just under $9 billion. This is the lowest since 2009, as shown in the chart below. The same thing is happening to SPACs. Total SPACs that went public in Q1 were down 57% year over year, the lowest in the last eight quarters. I believe the volatility is going to last for a while as inflation continues to persist at high levels while the economy weakens. This will continue to post headwinds on Futu as trading volume is likely to remain suppressed in the near term. FactSet Strong Competition As Futu shifts its focus away from China due to regulatory concerns, I believe the total addressable market for the company going forward is minimal. Its strong client number growth in Hong Kong (its primary market) is likely unsustainable as the country only has a population of 7 million people, which kneecapped its growth. It is worth noting that the increasing client number is likely just smoke and mirrors. A lot of the new users probably aren't actually interested in investing and aren't likely to contribute any revenue to the company. Most of these users are likely acquired through promotions and are only on the platform because the company is giving away free stocks. Therefore, in the latest earnings, we saw the number of new clients go up while quarterly revenue went down. The company is trying to expand into countries like Australia and Singapore in order to expand its user base and revenue stream. However, the investment brokerage market in these countries is already very saturated with tons of competitors in the space. For example in Australia, it is facing competition from traditional banks like Commonwealth Bank, neobanks like Revolut, and brokers like CMC Market and Interactive Brokers (IBKR). In Singapore, it is facing competition from Tiger Brokers (TIGR), DBS (DBSDF), TD Ameritrade (SCHW), etc. I also believe Futu has no competitive advantage in this market. The company takes pride in its UI and UX but other companies are catching up quickly, now offering the same, if not better experiences for users. Traditional banks and neobanks also have a slight edge as it allows users to manage all their finances easily in one place, and transfers can be instantly done. Weak Financials Futu Holdings reported its Q1 financial earnings in June and the results are very underwhelming. The total number of paying clients was 1.3 million, up 67.9% YoY (year over year), total registered users were 2.9 million, up 48.7%, while total users were 18.1 million, up 27.1%. It is worth noting that the company's definition of paying clients refers to users with assets in their trading account, rather than users that transact. As mentioned above, the growth in client base is likely due to promotional efforts, which include cash coupons or free stocks for newly deposited accounts. Therefore despite the jump in clients, trading volume and revenue were still down.
Shareholder Returns
| FUTU | US Capital Markets | US Market | |
|---|---|---|---|
| 7D | -2.6% | -3.5% | -2.0% |
| 1Y | -56.9% | -23.7% | -20.3% |
Return vs Industry: FUTU underperformed the US Capital Markets industry which returned -25.5% over the past year.
Return vs Market: FUTU underperformed the US Market which returned -22.1% over the past year.
Price Volatility
| FUTU volatility | |
|---|---|
| FUTU Average Weekly Movement | 8.8% |
| Capital Markets Industry Average Movement | 0.4% |
| Market Average Movement | 6.9% |
| 10% most volatile stocks in US Market | 15.8% |
| 10% least volatile stocks in US Market | 2.8% |
Stable Share Price: FUTU is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 9% a week.
Volatility Over Time: FUTU's weekly volatility (9%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 2007 | 2,318 | Leaf Li | https://www.futuholdings.com |
Futu Holdings Limited operates an online brokerage and wealth management platform in Hong Kong and internationally. The company provides trading, clearing, and settlement services; margin financing and securities lending services; and stock yield enhancement program. It also offers online wealth management services under the brand of Futu Money Plus through its Futubull and moomoo platforms, which give access to mutual funds, private funds, and bonds; market data and information services; and NiuNiu Community, which serves as an open forum for users and clients to share insights, ask questions, and exchange ideas.
Futu Holdings Limited Fundamentals Summary
| FUTU fundamental statistics | |
|---|---|
| Market Cap | US$5.67b |
| Earnings (TTM) | US$296.52m |
| Revenue (TTM) | US$831.36m |
19.1x
P/E Ratio6.8x
P/S RatioIs FUTU overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| FUTU income statement (TTM) | |
|---|---|
| Revenue | HK$6.53b |
| Cost of Revenue | HK$724.16m |
| Gross Profit | HK$5.80b |
| Other Expenses | HK$3.47b |
| Earnings | HK$2.33b |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 15.83 |
| Gross Margin | 88.90% |
| Net Profit Margin | 35.67% |
| Debt/Equity Ratio | 22.3% |
How did FUTU perform over the long term?
See historical performance and comparison