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Plus500: a stock with plenty of attention Plus500 is an Israel-based provider of financial Contract for Differences (CFDs). The company is regulated in the UK by the Financial Conduct Authority. Its service is then ‘passported’ throughout the EU, meaning that it can legally take customers from any EU nation. Plus500 first came came to the market in July 2013 at around 115p. The shares have recently changed hands for more than 650p. Shares in the company have attracted considerable interest from the UK’s private investor community. Plus500 has become one of AIM’s fever stocks, producing some large share price moves as bulls and bears of the stock thrash it out on bulletin boards. When I first heard of Plus500, I will admit that I didn’t get it. First, I am an avid reader of the financial press and bulletin boards but had never heard them discussed as a service provider. Second, the market that they entered was already populated by dozens of providers, including one 800-pound gorilla, IG Markets. It seemed very hopeful to expect a new entrant to succeed in such a well-established industry. The bull case for Plus500 comes from claims around its innovative customer recruitment model and low cost base. Financial statements reported by the company have shown industry outperformance in both revenue growth and customer acquisition. Plus500 runs an affiliate programme whereby ordinary people can get paid significant amounts to recruit new customers. The company makes much of the strength of its mobile offering.

The android app has over 1 million installs and enjoys an average rating of 4.3 in Google Play. The app has over 16,000 reviews and more than 50,000 recommendations on Google+. That’s a long way ahead of IG, whose android app has an average score of 4.0, less than half a million installs, 1,213 reviews and just 2,637 recommends on Google+. It was surprising that Plus500 received so much more attention on Google Play than its much larger, established and recognised competitor. AIM Prospector research of some websites discussing Plus500 has brought further confusion. AIM Prospector examined the website The site claims to be ‘informative’ and contains a ‘Plus500 CFD Broker Review’. The author writes about the services offered by Plus500 and how the business is regulated. The site itself contains a number of advertisements for Plus500. The URL in the banner ad for Plus500 in the review contains parameters that make me suspect that the owner of the site is being paid by Plus500 for click-throughs. Also, reading the data that is transferred to my browser when clicking ‘Open Real Account’, the URLs requested contain a number of parameters that again make me think that there might be a commercial arrangement between

Plus500 and the operators of the domain. The review concludes: ‘I would definitely recommend Plus500’. However, I do not consider the review to be independent, nor could I find anything on declaring a commercial relationship with Plus500. Of further concern is the identity of the reviewer ‘Connor Bradshaw’. Plus500 is keen at all times to point out that it does not accept US customers. The author writes: ‘I got my $25 welcome bonus and then funded $300 (minimum is $100) to my live account. After a few weeks later, I funded another $8,000 into my account once I decided to really trade with them.’ I could not find anything on the website where it is made explicit that the review author had actually placed a trade with Plus500. So why is the review being written? The review site contains a link to a Google+ profile for the claimed author. Here, ‘Connor Bradshaw’ claims to be an Engineer working in the UK. The site records only three births of a ‘Connor Bradshaw’ in England and Wales that would now be of adult age. The oldest of these is just 21. The review writer claims to have been ‘trading the market since 2011’, so they could be the same person. The Google+ profile claims that the author has ‘2 kids... awesome wife’. That would be some cracking on for a 21 year old. It is also quite an un-British way to write about one’s family. A comment attributed to ‘Connor’ 5

September 2014 AIM Prospector  
September 2014 AIM Prospector  

Featuring five AIM-quoted companies: Belvoir Lettings, Bonmarche, Cohort plc, Plus500 and Rotala.