Still My Highest-Conviction Investment: Q4 Update on Flow Traders

Great results, growth plans working, crypto and passive investing tailwinds. I have added to my position.

Flow Traders reported a great Q4, sending the stock up 10%+ at the moment of writing. The company continues to benefit from higher market volumes and volatility, leading to an even stronger EPS of €1.42 for the quarter and a full-year EPS of €3.56. This puts the stock at a P/E ratio of just 7.5 at the current price of €26.4 - still an attractive valuation.

Here is my original analysis of Flow Traders:

Flow Traders - antifragile company with potential 50% earnings yield

This was Flow Traders' second-most profitable year in its 24-year history, with Net Trading Income (NTI) reaching €468 million—only trailing the COVID-driven volatility spike. EBITDA margins returned to 45% (historical average), up from just 22% last year.

Growth Strategy is Paying Off

Flow Traders’ trading capital expansion plan and growth & diversification strategy are paying off. The ability to dynamically shift capital between different asset classes and regions allowed the company to capture trading opportunities more efficiently.

• Stronger activity in Asia, Europe, and Crypto markets contributed to the quarter’s outperformance.

• The company expanded trading capital and shareholder equity by 30% in 2024, significantly increasing its capacity.

• Management reiterated that they will continue to seek strategic debt financing to accelerate further expansion.

Despite volatility still being moderate by historical standards, Flow Traders has structurally improved its NTI generation. The company now generates higher profits for the same volatility level.

I believe that with faster growth of trading capital from retained earnings and a bit of additional debt, the market will rerate Flow Traders with a multiple more appropriate for a growth company with high returns on capital. So, I still expect 2-3x from this company, even if there is no sudden spike in volatility.

Crypto and Passive Investing Are Long-Term Tailwinds

Crypto ETPs are becoming a meaningful tailwind, with growing traded volume and increasing value traded in digital assets. I believe this trend will continue as:

1. Crypto adoption expands globally.

2. Regulatory clarity improves.

3. More institutional capital enters the space.

Beyond crypto, passive investing ETP growth remains another secular driver that benefits Flow Traders.

Conclusion

This quarter reaffirmed my thesis on Flow Traders, which is still my highest-conviction idea so far. The structural improvements in NTI, strong execution of the capital expansion plan and growth & diversification strategy, and tailwinds from crypto and passive investing make it a great investment at current prices (even though they increased by 50%+ from the dip in summer). I have added to my position.

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Disclaimer:

I/we own shares of Flow Traders at the moment of publication.

This article is for educational purposes only. This is not an investment advice. I may buy or sell these securities at any time. Please see the full disclaimer here.