IG Group's Expectation-Beating Revenue

IG Group's Expectation-Beating Revenue

over 3 years ago2 mins

Online trading platform IG Group revealed a better-than-expected revenue update on Thursday that its investors wouldn’t have swapped for anything 💰

What does this mean?

Analysts had been expecting IG to make about $780 million in revenue this financial year, which started in June. So when the company announced its first-quarter revenue alone was $270 million – over a third of that annual prediction and 62% higher than the same time last year – investors were all too happy to send its shares up 6% 📈 IG reckons its success was partly thanks to 50% more active customers than the same time last year, as well as the 129% increase in new customers placing their first ever trade. It’s in good company too: rivals Plus500 and CMC Markets have both pointed to similarly positive trends recently.

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Why should I care?

The more activity on IG’s platform, the more money it makes. So it would’ve been helped this summer by the risk-hungry “YOLO traders” who hoped to turn their stimulus checks into a quick buck – first by buying up shares of bankrupt companies, then by investing in short-term call options on big US tech stocks last month 💻 And if that wasn’t risky enough, traders using IG tend to rely on borrowed money – or “leverage” – which amplifies potential losses as well as potential gains.

Source: Bloomberg
Source: Bloomberg

IG makes its money from both trading commissions and “spreads” – that is, by offering the trader a slightly worse price than if they’d accessed the markets directly and pocketing the difference 🤔 There are trading platforms that offer “zero-fee” trading on certain assets these days, but there’s also no such thing as a free lunch. They need to make money from you somehow – and they might do it by selling your orders to brokers, or selling them to institutional investors who use your data to inform their own trades.

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