XTB.com shares plummet 22% after weak Q3 preliminary results released

X Trade Brokers Dom Maklerski SA (WSE:XTB), the Warsaw Stock Exchange listed parent company of FCA regulated retail forex broker XTB.com, has issued a profit warning with the exchange for the third quarter of 2016.

XTB reported that it expects to report Q3 revenue of 42.8 million zlotys (USD $11.0 million), down a whopping 55% YoY from last year’s Q3 Revs of 95.7 million zlotys. In the first two quarters of 2016 XTB averaged revenue of 56.9 million zlotys, 25% more than in Q3.

The company still plans to report a net profit for Q3 of 4.2 million zlotys ($1.1 million), down 92% from 50.9 million zlotys last year Q3.

In a statement, the company blamed the lower Revenues mainly on lower volatility compared to previous quarters, creating less investment opportunities for XTB clients. Offsetting the lower revenues were also lower operating expenses in Q3, down by 37% (i.e. PLN 20 million) QoQ. This decrease resulted primarily from lower marketing costs and other external services. XTB spent more money in Q2 as part of a global branding campaign around the company’s May 2016 IPO.

Separately, XTB reported that its planned acquisition of the customer portfolio of HFT Brokers has hit a snag. XTB has formally withdrawn from negotiations after a disagreement over price.

Shares of XTB took a deep dive after both news items were released. However we believe that it was mainly the disappointing financial results sending XTB shares downward. For the day Tuesday, XTB traded off 22% to close at PLN 7.00 per share. XTB shares had traded down as low as PLN 6.57 during the day, setting a new all-time low for the stock.

XTB successfully completed its IPO in May at a valuation of $349 million, at a price of PLN 11.50 per share. XTB shares have traded as high as PLN 15.47, but at their current price of 7.00 sit 39% below their IPO price.

XTB will provide more details on its Q3 financial results by mid November.


XTB share price, IPO to present. Source: Google Finance.

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