Despite Solid Performance in H1 2020, XTB Share Price is Plummeting

After releasing its financial results on Tuesday the 28th of July, the share price of Polish brokerage XTB, which has been on an upward trend since around March, has taken a turn for the worst.

In fact, since releasing its financial report on Tuesday, XTB's share price has fallen by more than 35 percent as of the time of publishing, falling from PLN 29.10 (EUR 6.60) at its peak on the 28th of July. On Wednesday, the broker's share price fell down to PLN 19.50 by the end of the session and has continued to move up and down this morning.

Despite this decline, it is worth pointing out that year-to-date, the Polish trading provider's shares are still up more than 370 percent as of the time of publishing, but this number is reducing as the broker's shares continue to trend downwards.

Investors flock to broker's stock

It is also interesting that on the 29th of July, when XTB's shares did the majority of the downward movement, trading of the company's stock was at historically high with a volume of PLN 170.31 million, with more than 7.57 million stocks traded.

Speaking to Finance Magnates, Paweł Szejko, CFO and Member of The Board at XTB, explained: "The first half of 2020 was record breaking for XTB for many reasons. From the perspective of the last few quarters we reported extremely good results. Consolidated net profit amounted to PLN 293,5 million compared to PLN 5,2 million a year earlier. We also noted a record number of new clients i.e. over 52 thousand compared to 16 thousand a year earlier (an increase of 225,9% y/y)."

"Unfortunately, the broad market's expectations concerning Q2 results, especially of individual investors which recently were extraordinary active in trading of XTB shares, were in our view far higher."

XTB reports solid H1 of 2020, but Q2 lags

As Finance Magnates reported, XTB reported a stellar first half of 2020, driven by the broker's performance in the first quarter of 2020, which captured the heightened market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term seen towards the end of February and throughout March.

Although the broker reported positive metrics for the first half overall, the financial report did show a notable slow down during the second quarter, which might be the reason behind the drop in the share price.

In particular, in the second quarter, net profit was PLN 117.52 million, whereas the first quarter of 2020 recorded a net profit of PLN 175.97 million, which is lower by 49.7 percent. Net operating income also fell from PLN 306.7 million in the first three months of the year down to PLN 211.5 million (31.0 percent drop).

However, the situation definitely wasn't all bad for the Polish broker during the second quarter. In fact, the firm added more clients in the second quarter than it did in the first (39.3 percent growth), and trading in contracts for difference (CFDs) was also stronger in Q2 (5.6 percent growth).