CMC Markets shares jump 18% Monday after layoffs announced
Shares of UK based online brokerage outfit CMC Markets (LON:CMCX) rose by 18% on Monday, following the company’s report that it was initiating a cost cutting effort that would include about 200 layoffs – or about 17% of CMC’s global workforce.
Following the pre-opening news release, CMC shares opened slightly higher than Friday’s close (of 132.8p) at about 138p, but continued to rise as trading continued, closing at 157p – up more than 18% on the day. The 157p price marks CMC’s highest share price level in more than six months, since mid July 2023, but is still well below the company’s 52 week high of 254p set in Q1 2023.
The rise in CMC’s share price is the second one-day double-digit-percent jump it has seen already in 2024. In early January CMC indicated that its Revenues for the second half of FY2024 (i.e. the six month period from October 2023 thru March 2024) would be much improved over the previous six month period. That sent CMC’s share price up by more than 20%. The new announcement seems to give investors even more hope that the increase in Revenues will also hit the bottom line, and boost profits as the company’s cost base shrinks.
While CMC said that its planned layoffs of about 200 people worldwide would result in a one-time charge to earnings of £2.5 million, the resulting cost reduction should shave about £21 million annually off its expense base.
CMC Markets 6-month share price graph. Source: Google Finance.