Shares of Poland based Retail FX and CFDs brokerage house X Trade Brokers Dom Maklerski SA – operator of the XTB.com and X Open Hub brands – lost almost a third of their value on Wednesday, following the release of XTB’s Q2 and first half 2020 results.

XTB shares, which opened the day at PLN 28.40, closed at PLN 19.50, down PLN 8.90 or 31.3%  – mirroring the company’s 31% drop in Revenues in Q2.

XTB shares on the Warsaw Stock Exchange, past six months. Source: Google Finance.

In the big picture, however, XTB shares are still up big-time in 2020. XTB traded in the PLN 3-5 range throughout most of January through April, before taking off after reporting blockbuster Q1 results, eventually hitting an all-time high of PLN 29.30. So, PLN 19.50 still doesn’t look so bad. And at its current share price, XTB has a market capitalization of more than USD $600 million.

The phenomenon we saw yesterday with XTB was almost a mirror image of what happened just last week at IG Group in the UK. The company produced what were fairly good results from a historical perspective, but much lower than the previous quarter – and the market reacted accordingly.

(Not to self-congratulate our reporting here at FNG too much, but we’d note that the articles on the results of both IG and XTB at a number of Forex blogs had headlines such as activity “buzzing” or “solid performance”, basically copy-pasting the companies’ own bullish headlines, while our article headlines told the “real story” that stock market investors clearly picked up on too, and read “XTB sees 31% drop in Q2 Revenues…” and “IG Group activity moderates….”).

Interestingly, the burst bubble at XTB did not seem to affect the shares of other publicly traded, Europe-based Retail FX shops. IG and CMC Markets both ended the day flat (although as noted above IG had its “day of reckoning” already last week), Plus500 traded up 3%, and Swissquote was up 2%.

The question which stock market investors seem to be grappling with is whether or not the fantastic trading activity levels seen at the Retail FX and CFD brokers will continue, or if the Covid-19 fed market volatility in the first half of the year was just a blip on the radar. From one perspective, nobody really expects the wild volatility we saw in March, and to some degree in April through June, to continue indefinitely.

But on the other hand, not only did online brokers do well in 1H-2020 but they also signed up a record number of new clients – some of whom frustrated, young sports bettors with no sports to bet on, who turned to financial day trading. Some of those newfound clients might go back to (just) sports betting, but a large number might just have discovered a new passion.