Forex trading platform and Spread Betting provider IG Group published full-year figures this morning and as is so often the case with IG the data makes impressive reading.
IG net trading revenues rose by +31% over that seen in full-year 2020 to reach £853.40 million
And when that figure is adjusted to reflect hedging activities related to the billion-dollar acquisition of TastyTrade earlier this year revenue reaches £861.30 million.
The total number of active clients also rose by 31% to 313,000 with the number of new clients onboarded in this financial year jumping to 134,800.
IG Group paying a dividend yield of 5.0%
IG Group’s pre-tax profits rose by +52% to £450.30 million and when adjusted, they rise as high as $477.8 million Doing some crude maths we can calculate that IG Group made a profit of £1438.65 per client.
That kind of cash flow supports a proposed final dividend of 30.4p, which would bring the total dividend for the year to 43.2p
These are stunning numbers by anyone standards and given IG’s foray into the US market, it surely won’t be long before revenues are knocking on the door of £1.0 billion.
The full-year numbers have hit the tape just a week before Robinhood looks to IPO in New York, aiming for a valuation of around 26 times revenues. Whilst e-Toro, which is reversing into a SPAC is hoping to achieve a valuation of $10.0 billion or 16 times its revenues.
If we took the average of those multiples which is 21 times and applied it to IGs pre-tax profits for 2021, and no the far higher revenue figure, we reach a valuation of £9.45 billion well in excess of the firms current market cap of £3.74 billion.
Robinhood’s prospective valuation suggests that each of its 18 million clients are worth $1944.00, even though their average account balance is just $240.00
As we have noted above IG is generating profits per customer figure, that’s not dissimilar to that value from its smaller but wealthier client base.
Quite why and for how long this valuation disparity will persist remains to be seen, but as IGs business grows in the USA, and with an American CEO at the helm, we might imagine a US listing for the business in future. Or perhaps a US venture capital buyer appearing, to bid for and take the business private, only to re-list it in the US, a little further down the track.
For now, though the business remains rooted in London, broker comment here has been positive with Barclays raising its target price for IG shares to 1185p versus the current market value of 865p. The wider market on the other hand seems to believe that all the good news is priced into IG Group shares which are largely unchanged over the year to date and on the day today,
Commenting on the FY figures IG CEO June Felix said that:
“I am thrilled to announce a record-breaking performance for the Group and the substantial achievement of the revenue target for our Significant Opportunities portfolio one year ahead of plan. This record set of results has been delivered during a global pandemic and is a testament to the hard work and dedication of our people, the long-standing investments in making our technology resilient, and the strength of our client offering”
All of the above of course has been achieved against the background of the pandemic, something that makes IG Groups performance all the more extraordinary.
Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis