CMC Markets shares plunge on profit warning as trading boom ends

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Online trading company CMC Markets (CMCX.L) lost more than a quarter of its value in trading on Thursday as it issued a profit warning and cut its guidance by up to £80m ($110m).

The share price was down around 27% by afternoon in London as it said market volatility had eased from the extreme levels seen during the pandemic.

The stock was at its lowest level in more than a year, and headed for its worst day since 2016.

"Reduced volatility in markets has resulted in lower trading activity across both the newly acquired and existing cohort of clients. Similar trends have been seen across our non-leveraged and leveraged businesses," the company said.

CMC had logged a net operating income of almost £410m in the year to March 2021. This came alongside record profits as its clients traded more on market volatility.

The update was a change in tune from a previous trading update dated 29 July in which the company said that overall monthly active client numbers remained at similar levels as reported in 2021, which were up around a third from pre-pandemic levels.

CMC Markets stock suffered a tough day of trade. Chart: Yahoo Finance UK
CMC Markets stock suffered a tough day of trade. Chart: Yahoo Finance UK

The company's CEO Lord Peter Cruddas said at the time: "I remain confident in the outlook for CMC as we continue to make progress with our strategic initiatives as set out in our recent full-year results and I look forward to updating the market further on these at our half-year results later this year.”

The warning also comes weeks after Cruddas was paid a £55m dividend off the back of the company's soaring profits.

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CMC and its peers have been riding a wave of cash as people new to the stock market invested their pent-up pandemic savings.

Last month, Hargreaves Lansdown shares also fell after it warned the pandemic trading boom was over.

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