Hargreaves Lansdown's assets soar by £30bn but Reddit trading boom may have peaked
British stockbroker Hargreaves Lansdown (HL.L) saw customer numbers and assets soar in the past 12 months, as a boom in online trading among the young boosted its business.
Hargreaves Lansdown said on Monday that assets under management on its platform rose by 30% last year to £135bn ($187.2bn), as a record 233,000 net new customers signed up. Hargreaves saw net inflows of £8.7bn in the 12 months to 30 June.
Hargreaves Lansdown has benefited from a worldwide boom in retail investing over the last year and a half as millions of people have flocked to forums like Reddit's WallStreetBets to trade stock tips and cryptocurrency ideas.
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"The pandemic has accelerated two trends that were already evident to us: a permanent shift to digital; and a change in the demographic mix," chief executive Chris Hill said in a statement.
"Demand for our digital services has soared, with 393 million digital visits and 98% of trades being done online. In FY21, 83% of our new clients were under 55, as we saw younger clients showing an interest in investing and saving, prioritising financial resilience as they benefit from the transition of wealth from older generations."
Revenue rose 15% to £631m but rising costs hit profits, which fell 3% to £366m. Costs rose as Hargeaves Lansdown hired more staff to deal with the surge in clients. Stock dealing costs more or less doubled to £35.6m, as new customers traded more frequently and bought costly overseas stocks. The company said costs were likely to continue to increase in line with customer growth.
The recent global explosion of interest in the stock market has coincided with the lockdowns around the world. Hargreaves said it was "difficult to say" whether heightened interest will continue as the world gets back to normal.
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"As we have eased out of lockdown and entered the summer months, we have seen a slowdown in dealing volumes and client activity versus the elevated levels this time last year, which is also normal for this time of year and in line with management expectations," the company said.
Shares in the company slumped 9% on the weak profitability and disappointing guidance on cost and growth.
"Our focus is, as always, on our clients and their lifelong needs, not just their short-term interests," Hill said. "We have been able to capitalise on this extraordinary year — and enlarge our client base substantially — due to our previous investment decisions and confidence in the opportunity ahead.
"As the UK's market-leading digital wealth management service we have continuously advanced our service and broadened and strengthened our proposition, as client needs evolve, and the wealth market continues to broaden and digitise."
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