Plus500 Ltd (LON:PLUS), the AIM-listed trading platform, endured a disastrous slump in its valuation last week after it announced that it had frozen the accounts of nearly half of its UK customers, following the implementation of fresh anti-money laundering checks.
Plus500’s share price closed Friday at 248.00p, down 67 percent for the week. At one point on Friday the company took its shares temporarily off the market in order to address the slide. However, upon resuming trading shortly after, the slump extended with the share price dropping as low as 198.00p before recovering somewhat to close the day at a 35 percent loss.
“The current situation is regrettable, and we apologise to customers whose accounts are frozen; we intend to resolve these issues within as short a time as possible,” Plus500’s chief executive Gal Haber said on Friday. “Shareholders can also rest assured that we are doing everything in our power to protect our UK market position and we are in close dialogue with the FCA.”
Plus500 said an update on the situation will be posted on Wednesday, when the company holds its annual general meeting.
Commentators have noted that it is somewhat unfortunate, given the events of last week, that the company’s board is will seek salary increases at the AGM. It is likely that shareholders will be asked to increase Harber’s salary from £150,000 a year to almost £200,000, while the board will also seek to increase chairman Alastair Gordon's salary from £55,000 per annum to £60,500.
The company was attacked by a number of short sellers once the freezing of UK accounts had been announced, while others viewed the situation as an investment opportunity not to be missed.
Gotham City Research advised investors to be wary of holding or buying Plus500 shares and Cable Car Capital said its new share price target for the Israeli-based broker is just 76p.
In contrast Odey Asset Management has upped its stake in Plus500 to 14 percent, indicating that it sees a bargain amidst the company’s current problems, while Titan Investment Partners said it “watched in utter astonishment at the carnage that has befallen the stock price of Plus500.”
“I believe the current stock price to be a rare market mispricing opportunity as a direct consequence of fear and misinformation,” Titan Investment Partners said on Saturday. “The situation to us at Plus500 is now binary – either the stock is an outright fraud and the bear case is intact or, the bears do not understand the industry that Plus500 operates in and this is a monumental buying opportunity.”