Plus500 shares plunge 17% on Monday

Further to our article yesterday on how stock market investors have caught on to the fact that there has been little volatility in the FX markets the past few months, sending shares of publicly traded Retail Forex brokers into a tailspin….

Monday saw another victim of the sell-off, with London Stock Exchange AIM-listed broker Plus500 (LON:PLUS) hit hard. In much larger than average volume – 6.6 million shares traded hands yesterday, versus a daily average of just under 800,000 shares – Plus500 shares dropped 17% to close at £3.66, their lowest level since crossing the £4 barrier in February and about half their peak valuation in April.

Plus500 share price Jul2014

Plus500 share price graph past six months. Up, and back down. Source: Google Finance.

Plus500 had seen a large amount of institutional buying of its shares recently, with JP Morgan building up a 15% stake in Plus500 and, more recently, Odey Asset Management picking up a 10% holding.

We should find out soon, but we wonder if either of these institutions began to pare their positions, leading to downward pressure on the stock and the much-bigger-than-average volume.

In the ‘big picture’, however, long term holders of Plus500 shares shouldn’t have reason to be upset. Plus500 stock is still valued at more than 3x its IPO price of a year ago, with a market value of about £420 million ($715 million).

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