Hargreaves Lansdown’s shares have slumped further after revealing growth in new business and clients has slowed as the war in Ukraine and macroeconomic uncertainty knocks investor confidence.
After unveiling an ambitious plan to boost its client base to 2.6 million by 2026 and grow net new business by £20bn, the D2C giant disappointed with its latest trading update
It drew in £2.5bn of net new business over the four months to 30 April 2022, nearly halve the £4.6bn that flooded into the group over this time last year.
New clients signing up to the platform has also fallen significantly. Only 42,000 new clients have been added to the platform so far this year, two thirds lower than the 126,000 who joined a year ago. Total active clients are now 1.7 million.
The news was not well-received by markets, which sent Hargreaves’ shares down 10% to 808p in the first hour of trading.
Though the price recovered to 836p, it was still one of the FTSE 100’s biggest fallers, behind Ocado and Scottish Mortgage. The D2C giant has now seen close to 40% wiped off its value year-to-date.
Hargreaves has previously warned the surge in new business and client activity it enjoyed at the height of the coronavirus pandemic could be difficult to sustain.
Chief executive Chris Hill (pictured) said the “challenging backdrop driven by unprecedented macro-economic and geo-political events” in 2022 had weighed on markets and dented investor confidence further.
Total assets under administration now stands at £132.2m, down from £141.2bn at the end of December 2021, with £11.4bn of negative market movements offsetting net inflows.
However, Hill added there had been a “significant step up in flows” in March and April thanks to the firm’s tax year end campaign, “with £1.8 billion of tax wrapped inflows leading to a record 747,000 clients contributing to their ISAs and pensions this tax year”.
“As we head toward the end of our financial year, given the uncertain economic environment and market conditions, we are focused on cost control and investment discipline,” he said.
“We are reiterating our FY2022 guidance whilst raising expected revenue margin on cash to 30-35bps for the full financial year as we see the impact of base rate rises starting to come through.”
