What happened
Shares of Hong Kong-based digital broker and wealth management platform Futu Holdings (FUTU -1.53%) rose more than 10% at one point this morning after the company reported earnings.
So what
The company reported total revenue in the fourth quarter of 2020 equivalent to $153 million and turned a profit of $68.7 million. Both numbers beat analysts' expectations.
For the full year of 2020, Futu generated total revenue equivalent to $427 million and turned a profit of $171 million. Total revenue and profits for the full year of 2020 increased by 212% and nearly 700%, respectively.
Image source: Getty Images.
Futu achieved this by increasing the number of people using its platform. The total number of users in 2020 increased by more than 58% from 2019, and total client assets increased by more than 227%.
"As we further enhanced our capital base, we are able to support a larger margin financing balance, ramp up our marketing efforts in international markets, and further invest into our technology infrastructure," Futu's CFO Arthur Yu Chen said in a statement.
Now what
Futu is showing great promise with its recent performance, but it also happened following a big year of initial public offerings in China in which 35 Chinese firms went public. Futu helps clients trade stocks and other financial instruments in Hong King and China, so this no doubt contributed to Futu's success in 2020.
Fewer IPOs and increased regulatory scrutiny in China when it comes to trading may create a more difficult environment for Futu this year, so it's something to keep an eye on and study closely before investing.
