The Freetrade logo on a smartphone screen.
Rafael Henrique | Sopa Images | Light flare | Getty Images
UK stock trading app Freetrade broke even earlier this year, the company told CNBC, marking its first-ever move into the black after suffering losses for the whole of 2023.
Freetrade reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of £100,000 ($124,863) in the first quarter of 2024, according to unaudited financial statements shared with CNBC.
Preliminary revenues reached £6.7 million in the quarter.
Free trade still generated a loss of £8.3 million in 2023, down from the £28.8 million it accumulated the previous year. Revenues soared to £21.6m last year, up 45% on 2022.
“We defied challenging market conditions and achieved healthy growth in 2023 while significantly reducing losses” in 2022, said Adam Dodds, CEO and founder of Freetrade.
Equity Equity Investors Rejoice
This development will come as good news to Freetrade crowdfunding investors, who are looking for an update on the company’s progress towards profitability after a difficult financial period.
Freetrade saw its valuation reduced by 65% to £225 million ($280.3 million), from £650 million in 2023 in its latest equity crowdfunding round on Crowdcube, with the company blaming a ” different market environment” plagued by higher interest rates and inflation.
Net inflows also totaled £130 million in the first quarter, as retail investor activity increased in response to the resurgence of markets last year. Assets under administration also reached £1.8 billion.
“What’s important to our crowdfunding investors is that we charted a clear path to breakeven in our last fundraising round,” Dodds said.
“As we look ahead to the remainder of 2024, we have major product developments that will support our next phase of growth with preparations underway to deploy our web platform.”
Stock markets have seen sharp declines in 2022 due to macroeconomic uncertainty and rising interest rates fueled by Russia’s all-out invasion of Ukraine, which has triggered global risk aversion entire.
The UK’s answer to Robinhood
Freetrade is a competitor to Robinhood, the American stock trading platform. Robinhood recently relaunched in the UK in March, in its third attempt to break into the European market.
Freetrade’s Dodds said he was undeterred by Robinhood’s return to the UK, telling CNBC via email that “more choice and competition is good for retail customers.”
“Ultimately there will be many winners in the UK market, offering the full range of tax packages and features expected by the local investor,” he added.
Freetrade said its first-quarter performance was driven by higher trading volumes as well as higher foreign exchange revenue.
Since October 2023, Freetrade said it had seen a marked increase in retail investor participation amid speculation about when and how often the US Federal Reserve and other central banks would cut rates this year.
A rise in cryptocurrency prices also helped Freetrade in the first quarter. Although the platform does not offer cryptocurrency trading, Freetrade has seen increased activity from retail investors in stocks correlated to cryptocurrencies such as Coinbase, MicroStrategyAnd Digital marathon.
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