Spread bet company WorldSpreads is expected to see heavy investments start to pay off

Last Updated on Tuesday, 04 October 2011 15:16 Written by Will Peters Tuesday, 04 October 2011 15:11

A new equity note released by equity research house, Edison, has shown that WorldSpreads is set to benefit from investments that have led to well-flagged losses.

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One of the UKs more prominent spread betting companies, WorldSpreads Group plc, is tipped to start seeing the benefits of the heavy investments it has made into its business over the past two years.

Edison Investment Research have cited heavy investment into marketing, new partnerships and back-office infrastructure is being key to further growth.

However, analysts note that what will be working against the spread bet company is the observation that the traditional spread betting customer base is fickle and that competition remains intense in an internet-delivered market.

What will help WorldSpreads is structural growth in the overall spread betting market. It is believed that the company holds sway over 3% of a market that is famously dominated by IG Index, but as the overall market grows so will revenues realised by IG Index.

In addition to this organic growth, WorldSpreads has pro-actively sought market share growth through:

• Opening international offices. A physical site is seen as important to run seminars, meet clients and give customers confidence in depositing money.

• An aggressive marketing campaign with targeted zero spread offering and cash back.

• An enhanced customer proposition with upgraded technology

"We do not believe that WS is unique in these initiatives, but the revenue, trading and account growth reported in the results to March 2011 would suggest progress is being made. The low current market share (c 3% in UK) and international growth give considerable upside potential," says the Edison report.