Free trade sign on smartphone screen.
Rafael Enrique | Sopa Images | Light Rocket | Getty Images
British stock trading app Freetrade told CNBC it broke even earlier this year, marking the app’s first profit after posting losses throughout 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 revenue for the quarter reached £6.7 million.
Free trade will still generate a loss of £8.3m in 2023, down from a loss of £28.8m the previous year. Revenue climbed to £21.6m last year, a 45% increase on 2022.
Adam Dodds, CEO and founder of Freetrade, said, “We overcame difficult market conditions to achieve healthy growth in 2023 while significantly reducing losses in 2022.”
Equity crowdfunders rejoice
The development will be good news for Freetrade’s crowdfunding investors, who have been looking for the company’s latest progress towards profitability after a tough financial period.
Freetrade’s valuation fell 65% to £225 million ($280.3 million) from £650 million in 2023 in the latest equity crowdfunding round on Crowdcube, which the company blamed on rising interest rates and inflation-plagued “Different market environments”.
Due to the market recovery last year, retail investor activity increased, with net inflows totaling £130 million in the first quarter. Assets under management also reach £1.8 billion.
“It’s important to our crowdfunding investors that we charted a clear path to breakeven during our last funding round,” Dodds said.
“Looking ahead to the remainder of 2024, we have completed key product developments that will support our next phase of growth and prepare us for the launch of our network platform.”
Stock markets fell sharply in 2022 as macroeconomic uncertainty and rising interest rates triggered by Russia’s full-scale invasion of Ukraine triggered a global safe-haven trade.
Britain’s response to Robin Hood
Freetrade is a competitor of US stock trading platform Robinhood. Robinhood recently relaunched in the UK in March, its third attempt to enter the European market.
Freetrade’s Dodds said he was not intimidated by Robinhood’s return to the UK, telling CNBC via email that “more choice and competition are good for retail customers.”
“Ultimately, there will be multiple winners in the UK market, offering the full suite of tax packaging and functionality that local retail investors expect,” he added.
Freetrade said its first-quarter results were driven by higher trading volumes and higher foreign exchange revenue.
Freetrade said retail investor participation has increased significantly since October 2023 amid speculation about when and how often the Federal Reserve and other central banks will cut interest rates this year.
Rising cryptocurrency prices also helped free trade in the first quarter.Although the platform does not offer cryptocurrency trading, Freetrade has seen increased retail investor activity in cryptocurrency-related stocks, such as Coin library, micro strategyand marathon numbers.
