Plus500 shares plummet for second successive day after revelations of accounting error

Plus500's share price suffered a second day of decline after it admitted a $103m accounting error which may have misled investors.

Shares fell to a 13-month low on reports that investors may have been misled by the firm's 2017 annual accounts, which stated it suffered no losses from client trading.

Plus500 today admitted that was a "drafting error" and that actually it had been hit by $103m (£80m) over the year.

The online broker's stock fell by a further 14 per cent on Friday to 907p, falling from 1,040p at the start of the day. It comes after the share price fell by a staggering 36 per cent during Thursday's trading from 1,635p.

The latest plunge in shares comes after it was revealed that the company had incorrectly claimed that "in 2017, as in 2016 and 2015, the company did not generate net revenues or losses from market P&L", when in fact it suffered losses of $103m in 2017. 

Plus500 has said that this was due to a "drafting error" and that the phrase "or losses" was incorrectly placed in the report and revealed that the losses occured as a result of "strong client trading performance."

"The words "or losses" in this statement were included erroneously," the company said. "Plus500 suffered a negative revenue impact of $103 million in the 2017 financial year due to strong client trading performance, particularly in the final quarter of that year.

"Further, the Company confirms that it incurred a negative revenue impact of $19.5 million for the financial year ended 31 December 2016 (2015: $0.0 million)."

It comes on the back of a warning that stricter regulations will hit 2019 revenue, which is now expected to come in below current market expectations, and has seen the firm's share price drop dramatically for two consecutive days.

The European Securities and Markets Authority has cracked down on the amount of money amatuer traders can borrow from brokers and as such the new regulations will have a direct impact on Plus500's high-risk contract-for-difference (CFD) financial products.

The firm warned on Thursday that this, along with its decision to maintain its current level of marketing budget, would likely mean lower profits for 2019, with it now revealed that they had misled investors regarding the company's financial position.

It was news that has shocked investors given that the broker, which allows punters to take high-risk, leveraged bets on the direction of shares, laimed it was "continuing to perform well" as recently as December, despite the rule changes.

"Results this week included disclosure that it took a $103 million loss from client's trading positions in 2017 compared with a $172 million gain in 2018," said Ascendo's head of research, Michael van Dulken. "However it had previously said that it hadn't generated revenue or losses from market P&L. The Times says in a private meeting in London, Plus500 shareholders confronted the company's management.

"Shares could go all the way to 770p, to see if 2015-16 resistance turns support."