IG Group stock drops 25% as Underdog revenue surges in Q3

IG Group's shares fell by around a quarter on Friday 2 October after a trading update covering the three months to 30 September 2026 disappointed investors, according to EGR.

The update showed group revenue down roughly 14% year on year to approximately £240m. Management said revenue retention for the quarter stood at around 70%, below the 80% average recorded since the firm introduced what it calls market-making optimisation measures.

OTC net trading revenue came in at about £155m, down around 18% year on year, though IG Group said OTC customer income had actually risen by roughly 8% over the same period.

The company has now trimmed its full-year 2026 revenue growth guidance to the mid-single digits, having previously pointed to a stronger trajectory.

Against that backdrop, IG Group also disclosed figures for Underdog, the US prediction markets and daily fantasy operator it agreed to buy in July. Underdog's net revenue for the quarter rose more than 100% year on year to approximately $105m, with the improvement coming just ahead of the fourth quarter, which captures the bulk of the 2026 NFL season. IG Group noted that the final three months of 2025 accounted for more than a third of Underdog's revenue for that year.

The acquisition, announced in July, is worth up to $1.3bn including upfront consideration of $1.1bn. At the time, IG Group described Underdog as "well placed" to succeed in the prediction markets sector. Underdog had already moved to build an in-house technology stack for that push by acquiring Aristotle Exchange last year.

Underdog started out in daily fantasy sports before a brief period in online sports betting, and was valued at $1.2bn following a Series C funding round in March 2025.

Speaking at a Bank of America conference last month, Underdog CEO Jeremy Levine credited IG Group chief executive Breon Corcoran for the deal, recalling their earlier history: Corcoran led Paddy Power Betfair when it bought Levine's previous startup, DRAFT, in 2017. Levine said: "I have a lot of admiration for [Corcoran] and he's obviously one of the most accomplished, if not the most accomplished CEOs in our space."

He added: "And then for [IG Group], they've clearly made it a priority to increase their US footprint, increase growth. And I'll let them speak more on why they did the deal, but for us it's very much a relationship with him, the shared DNA."

Levine also said: "And I think we can see together what that business can become. A lot of belief in the value and the upside."

Commenting on the quarterly results, Corcoran said: "Growth in first trades and active customers remained strong in Q3 2026," adding that "lower Q3 revenue reflected reduced OTC revenue retention in less supportive market conditions, and I remain confident in meeting our medium-term guidance."

IG Group is due to hold an investor day focused specifically on Underdog on 8 October, which is likely to give further detail on how the acquisition is expected to shape the group's US growth strategy.