For GAIN Capital, this is not the best of times and the retail clients are already complaining. The total of their transactions as at April 2019 stood at $146 billion. That can sound like a lot but when you realize that at the same time last year, the same figure stood at $222 billion, you will instantly notice why many are alarmed.
Slump and More Slump
Investors want nothing but an upward trend in their holdings so when GAIN Capital Holdings, Inc. announced its aggregated trading volumes for the first quarter of the year, clients were shocked. Eve in though there was some encouraging performance in March, the aggregated records for the first quarter showed a different figure when compared to a year ago. Even a quick monthly assessment showed a dip, the total for March 2019 was $169 billion only for April to have $146 billion.
At the end of the day, futures trading dipped last month and fell to 522,132 contracts. That was a loss of one-fifth in monthly performance as the month earlier had 622,194 contracts. Recently, Gain Capital published its financial results for the first quarter of 2019 and all that was very visible was nothing but a massive downturn. As for the revenues of the venture, it stood at $38.4 million, this translated to a slump of more than 60%. That was not all there was to the depressing results, even the company revenue also dropped on a quarterly basis by almost $80 million.
All in all, there was also a decrease in the quarterly net income with a loss of $28.4 million recorded. When one compares that with the same duration in the previous year, the profit recorded stood at a total of $11.9 million.
From impressive profits to stinging losses, Gain Capital surely has a lot of work to do. If nothing tangible is done and the results for the next quarter also reflect the same disappointing turn of events, some retail clients may have no other reason but to either pull out or remain in panic mode. As hinted earlier, clients are not interested in the bad news or the reasons behind the bad news, they are only interested in getting good results and ever-increasing dividends on their holdings. There are several options left for Gain Capital in the face of these challenges.
One is that they can examine their records and analyze all the performances for the year 2018. They should focus on the methods that worked and try to replicate the same strategies in future cycles. Another step that can be taken is for Gain Capital in-house experts to take a careful look at the 2019 results and carry out a forensic analysis of the performances for the first quarter of this year.
By then comparing the results for the two years, areas that are causing the slowing down of growth. To ensure that they are getting the right results, it is advisable that they also get the services of external auditors.