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Hargreaves Lansdown announce a fall in profits, and shares follow suit

Hargreaves Lansdown announce a fall in profits, and shares fall

Financial services and investment giant Hargreaves Lansdown have announced their latest results. The firm made a pre-tax profit of £366 million for the year to June 2021, down 3% on the previous 12-month period.

Despite this slight fall in profits, CEO Chris Hill describes the past 12 months as “extraordinary,” with their assets under administration reaching £135.5 billion, up 30% from the full year results published in 2020.

Hargreaves Lansdown also experienced record numbers of new users flocking to their platform, with 233,000 new additions over the last 12 months, bringing their total to more than 1.6 million. 83% of these new users are below the age of 55, bringing the median age of their clients down to 46.

This is Money reports that much of the growth in new users came with the rise of the “lockdown investor” – a trend that saw more turn to the stock market as people were ordered to stay at home.

This was further fuelled by the frenzy around “meme stocks” such as GameStop, which caused hundreds of millions in losses for short sellers earlier this year.

Hargreaves Lansdown share prices fell significantly after the announcement of their profits

A concern for many analysts is this generation of lockdown investors may not be in it for the long term.

Indeed, Hargreaves Lansdown have themselves warned that the recent surge in interest may come to an end as lockdowns ease. This, twinned with their fall in profits, has bred uncertainty among market investors.

Despite strong profits, shares in the financial services company fell more than 11% after the results were announced, which brought them to their lowest level of the year at 1,454.5p.

Hargreaves Lansdown’s total dividend for the year was down 8% to 50.5 pence a share.

Despite the fall in profits, CEO Chris Hill reflects on the past year with pride and remains hopeful going forward. “This has been an extraordinary year and I am proud of how our colleagues responded and continued to deliver to clients throughout this challenging period.”

Despite a possible drop-off in active investors, he believes that the younger mix of clients who do stick around will “underpin” the future growth of the company.

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