CMC Markets Plc, a British online trading firm whose business boomed during Covid-19 lockdowns, is close to erasing its huge gains of the pandemic era.
(Bloomberg) — CMC Markets Plc, a British online trading firm whose business boomed during Covid-19 lockdowns, is close to erasing its huge gains of the pandemic era.
The shares plunged 21% late Monday and extended declines on Tuesday after the company warned of a more “challenging environment” due to lower equity volumes in February and March. They are now only 26% higher than when the UK first went into lockdown in March 2020, having lost about two-thirds of their value since hitting a record peak in April 2021.
CMC — whose contracts-for-difference platform allows people to speculate on market movements without owning underlying securities — more than tripled in the first year of the pandemic as people turned to trading as a hobby while stuck at home.
Interest ebbed as lockdowns were lifted, and traders’ wallets are now being squeezed by the higher cost of everything from housing to food to energy. CMC’s rival, IG Group Holdings Plc, warned of quieter trading earlier this month.
The comments from CMC and IG are in contrast to high volumes at institutional exchanges amid volatility spurred by concerns around the banking system and monetary policy. Shares of London Stock Exchange Group Plc and Deutsche Boerse AG have outperformed this year.
“We find the comment about lower equity volumes surprising in light of evidence from the wider market with volatility spiking in March, which ordinarily ought to be supportive to activity levels,” Vivek Raja, an analyst at Shore Capital, wrote in a note. “At this stage, it is difficult to pinpoint exactly where the revenue weakness has been.”
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