Freetrade logo on a smartphone screen.
Rafael Enrique | Sopa Images | Light rocket | Getty Images
UK stock trading app Freetrade reached breakeven earlier this year, the company reported to CNBC, marking its first-ever turn into the black after suffering a full-year loss in 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 provided to CNBC.
Preliminary revenue for the quarter was £6.7 million.
Free trade still made a loss of £8.3 million in 2023, down from the £28.8 million loss it made the year before. Revenue rose to £21.6m last year, up 45% on 2022.
“We defied challenging market conditions and delivered healthy growth in 2023 while sharply reducing losses” in 2022, said Adam Dodds, CEO and founder of Freetrade.
Equity crowdfunders rejoice
The development will be welcome news for Freetrade crowdfunding investors who are seeking an update on the company’s progress towards profitability after a difficult financial period.
Freetrade’s valuation fell 65% to £225 million ($280.3 million) from £650 million in 2023 in its latest round of equity crowdfunding on Crowdcube, with the company blaming a “different market environment” suffering from higher interest rates and inflation.
Net inflows also totaled £130 million in the first quarter as retail investor activity increased in response to the recovery in markets last year. Assets under management also reached £1.8 billion.
“Importantly for our crowdfunding investors, we laid out a clear path to breakeven during our last fundraising,” Dodds said.
“Looking forward to the end of 2024, we have important product developments that will support our next phase of growth as we prepare to roll out our web platform.”
Stock markets experienced a severe downturn in 2022 as a result of macroeconomic uncertainty and rising interest rates caused by Russia’s full-scale invasion of Ukraine, which triggered risk-free trading around the world.
Britain’s answer to Robinhood
Freetrade is a competitor to Robinhood, an American stock trading platform. Robinhood recently relaunched in the UK in March, its third attempt to enter the European market.
Freetrade’s Dodds said he was not daunted by Robinhood’s return to the UK and told CNBC via email that “more choice and competition are good for retail customers.”
“Ultimately there will be several winners in the UK market, offering the full range of tax wrappers and features that the local retail investor expects,” he added.
Freetrade said its first-quarter results were driven by higher trading volumes as well as higher foreign exchange earnings.
Since October 2023, Freetrade said it has seen a marked increase in retail investor participation amid speculation about when and how often the US Federal Reserve and other central banks will cut rates this year.
Rising cryptocurrency prices also helped Freetrade in the first quarter. While the platform does not offer crypto trading, Freetrade has seen an increase in retail investor activity in crypto-related stocks such as Kinbase, MicrostrategyAnd Marathon Digital.