CMC Markets Lowers FY24 Outlook, Shares Tumble

<p>CMC Markets (LON: CMCX) has released a trading update today (Friday), revealing its expectations of a lower net operating income between £250 and £280 million for the fiscal year 2024. It is significantly lower than a consensus estimate of £334.8 million.
</p><p>CMC Markets Lowers Income Outlook
</p><p>The London-listed broker highlighted that “subdued market conditions have continued through August with <a href="https://www.financemagnates.com/forex/cmc-markets-q1-trading-activity-drops-upto-20/">trading and investing net revenues trending 20% lower year-on-year</a>. August, in particular, has seen a more challenging environment with markedly lower monetization of client trading activity due to a higher proportion of lower margin institutional volume.”
</p><p>However, the broker pointed out that “underlying market activity has the potential to recover.”
</p><p>Following the trading update, the share price of <a href="https://www.financemagnates.com/tag/cmc-markets/">CMC Markets</a> dropped almost 20 percent as trading opened on Friday morning, before showing some recovery. Year-to-date, CMC stock prices have declined by more than 55 percent.</p><p>Are the Good Days for Brokers Over?
</p><p>CMC Markets is one of the few publicly listed brokers with a wide range of offerings, including contracts for differences (CFDs), spread betting, stock trading, and even institutional products.
</p><p>In March 2023, <a href="https://www.financemagnates.com/forex/cmc-markets-fy23-net-income-follows-guidance-profit-drops-43/">the fiscal year ended</a> with a net income of £288.4 million for CMC, which was an increase of 2 percent from the previous year. The net trading revenue from CFDs and spread betting was £233.1 million, which was only 1 percent more than the last year. However, the net revenue from the investing stream dropped 21 percent to £37.9 million. On the other hand, it earned £13.9 million from interest income, compared to £0.8 million in the year before.
</p><p>In the latest update, the company said that: “Core KPIs including client money, assets under administration, and active clients across both the trading and investing businesses remain robust with no material change seen through recent weeks.”
</p><p>Further, the management of the company is expecting “operating costs excluding variable remuneration are unchanged at £240 million.”</p>

This article was written by Arnab Shome at www.financemagnates.com.