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FUTU Stock Down 24% in a Month: Should You Buy, Hold or Sell?
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Key Takeaways
FUTU fell nearly 24% in a month after regulators proposed penalties of about RMB1.85 billion.
Futu's Q1 revenues rose 24.7%, funded accounts grew 34.3%, and client assets climbed 47.2%.
Mainland China exposure and lower EPS estimates have raised uncertainty.
Futu Holdings (FUTU - Free Report) has gone from being a market favorite to a problem stock in a short time. The online brokerage behind Futubull and Moomoo is still adding users, lifting trading volume and expanding outside mainland China. Yet, the latest regulatory action has changed the way investors should look at FUTU stock.
The pressure is easy to understand. FUTU has plunged nearly 24% over the past month as Chinese regulators reprimanded relevant Futu entities in mainland China and Hong Kong for certain regulated activities conducted without required licenses or approvals, proposing penalties of about RMB1.85 billion (approximately US$271 million). The sell-off came even as first-quarter 2026 revenues rose 24.7% year over year to HK$5.86 billion (US$746.9 million).
This decline in the past month came amid its industry’s fall of just 0.5%, while its peers like Robinhood Markets (HOOD - Free Report) and Interactive Brokers Group (IBKR - Free Report) gained 27.2% and 7.7%, respectively.
That mix creates a tough call. Reported EPS per ADS fell to HK$6.00, or US$0.77, after the penalty-related charge. The business is not broken, but the stock now carries more regulatory, earnings and sentiment risk than many investors may want to hold.
FUTU's One-Month Price Performance
Image Source: Zacks Investment Research
FUTU’s Growth Still Looks Strong
Futu’s operating metrics remain impressive. Funded accounts rose 34.3% year over year to 3.59 million, while total users climbed 14.9% to 30.2 million. Client assets increased 47.2% to HK$1.22 trillion, and total trading volume grew 29.1% and reached HK$4.15 trillion, or about US$529.3 billion, in the quarter. For a brokerage platform, that means engagement is still healthy.
The company is also becoming less dependent on one market. Management highlighted strong growth in Singapore, Malaysia, Japan, Australia and Canada. Malaysia continued to lead in new client additions, and management expects that market to reach breakeven within six to 12 months. Japan is gaining traction in U.S. stock and options trading, while Futu is preparing more products, including Korean stock trading in select markets.
There are also signs of strength. Gross margin improved to 87.2%, operating income rose 31.5%, and operating margin reached 60.3%. Futu has been buying back stock under an $800 million repurchase program, with about $418 million already used by late May. S&P Global Ratings also reaffirmed Futu’s BBB- investment-grade rating with a stable outlook after the regulatory news, which suggests lenders and rating agencies are not treating the company as financially impaired.
FUTU's Penalty Changes the Story
The main issue is not the size of the fine alone. The proposed CSRC penalty includes confiscation of illegal gains of about RMB470 million and fines of about RMB1.38 billion for a total of roughly RMB1.85 billion. Futu booked the impact in first-quarter results, which drove net income down 61.2% year over year to HK$831.0 million (US$106.0 million).
Futu says the amount does not hurt financial stability, and pre-adjustment net income would have been much stronger at HK$2.92 billion (US$372.7 million), and non-GAAP adjusted net income would have been HK$3.01 billion (US$384.0 million).
Still, investors cannot simply look past a regulatory action tied to the company’s historic mainland China business. The exposure is meaningful. The company has already stopped account opening for mainland Chinese identity holders. Management said mainland China-funded accounts represented about 13% of funded accounts, around 17% of client assets and roughly 20% of revenues. Restrictions could weigh on future activity, making near-term earnings harder to forecast.
Competition Adds Pressure for FUTU
Competition is another pressure point. Hong Kong remains Futu’s core strength, but banks, brokers and fintech platforms are pushing harder into online trading and wealth products. Customer acquisition costs are already rising, with selling and marketing expenses up 21.3% year over year.
New areas such as crypto, prediction markets and Korean stock trading may help engagement, but they also bring execution and regulatory risks. PantherTrade, Futu’s virtual asset exchange, received its Hong Kong VATP license, but crypto remains a young and tightly watched market. For now, these growth options do not fully offset the uncertainty tied to mainland-related activity.
Valuation Needs a Bigger Discount
The valuation also needs a higher risk discount now. A fast-growing broker can deserve a premium when rules are clear, and earnings quality is improving. Futu’s operating business is healthy, but the share price plunge shows that investors are now pricing in a less certain path. Until the mainland impact is clearer, the stock looks more like a value trap than a clean rebound story.
Futu stock is trading at a forward 12-month price-to-earnings of 10.22X, slightly above its industry’s average of 9.92X but below its one-year median. Futu stock is also currently trading at a reasonable discount compared with its industry peers, Robinhood Markets and Interactive Brokers Group. This valuation disparity might not be as favorable as it seems. Robinhood Markets is trading at a forward 12-month price-to-earnings of 46.33X, while Interactive Brokers Group is trading at 35.39X.
FUTU: Valuation
Image Source: Zacks Investment Research
FUTU’s Estimate Revisions Also Depict a Bleak Outlook
Over the past 30 days, earnings estimates for both 2026 and 2027 have been revised downward, signaling a bearish outlook from analysts.
Magnitude – Consensus Estimate Trend
Image Source: Zacks Investment Research
Final Verdict: Sell FUTU Despite the Strong Platform
Futu remains a high-quality platform, but high quality does not always make a stock worth owning. Revenue growth, account additions and overseas expansion are real positives, and the investment-grade rating helps calm balance sheet concerns. Still, the regulatory issue has introduced a level of uncertainty that investors should not ignore.
For investors, FUTU now looks more like a risk-management decision than a bargain-hunting opportunity. The stock may rebound, but the path is less clear now. With earnings visibility reduced and regulatory issues, the better call is to sell FUTU stock.
At present, Futu carries a Zacks Rank #5 (Strong Sell).
View the Zacks #1 Rank List
Image: Bigstock
FUTU Stock Down 24% in a Month: Should You Buy, Hold or Sell?
Key Takeaways
Futu Holdings (FUTU - Free Report) has gone from being a market favorite to a problem stock in a short time. The online brokerage behind Futubull and Moomoo is still adding users, lifting trading volume and expanding outside mainland China. Yet, the latest regulatory action has changed the way investors should look at FUTU stock.
The pressure is easy to understand. FUTU has plunged nearly 24% over the past month as Chinese regulators reprimanded relevant Futu entities in mainland China and Hong Kong for certain regulated activities conducted without required licenses or approvals, proposing penalties of about RMB1.85 billion (approximately US$271 million). The sell-off came even as first-quarter 2026 revenues rose 24.7% year over year to HK$5.86 billion (US$746.9 million).
This decline in the past month came amid its industry’s fall of just 0.5%, while its peers like Robinhood Markets (HOOD - Free Report) and Interactive Brokers Group (IBKR - Free Report) gained 27.2% and 7.7%, respectively.
That mix creates a tough call. Reported EPS per ADS fell to HK$6.00, or US$0.77, after the penalty-related charge. The business is not broken, but the stock now carries more regulatory, earnings and sentiment risk than many investors may want to hold.
FUTU's One-Month Price Performance
Image Source: Zacks Investment Research
FUTU’s Growth Still Looks Strong
Futu’s operating metrics remain impressive. Funded accounts rose 34.3% year over year to 3.59 million, while total users climbed 14.9% to 30.2 million. Client assets increased 47.2% to HK$1.22 trillion, and total trading volume grew 29.1% and reached HK$4.15 trillion, or about US$529.3 billion, in the quarter. For a brokerage platform, that means engagement is still healthy.
The company is also becoming less dependent on one market. Management highlighted strong growth in Singapore, Malaysia, Japan, Australia and Canada. Malaysia continued to lead in new client additions, and management expects that market to reach breakeven within six to 12 months. Japan is gaining traction in U.S. stock and options trading, while Futu is preparing more products, including Korean stock trading in select markets.
There are also signs of strength. Gross margin improved to 87.2%, operating income rose 31.5%, and operating margin reached 60.3%. Futu has been buying back stock under an $800 million repurchase program, with about $418 million already used by late May. S&P Global Ratings also reaffirmed Futu’s BBB- investment-grade rating with a stable outlook after the regulatory news, which suggests lenders and rating agencies are not treating the company as financially impaired.
FUTU's Penalty Changes the Story
The main issue is not the size of the fine alone. The proposed CSRC penalty includes confiscation of illegal gains of about RMB470 million and fines of about RMB1.38 billion for a total of roughly RMB1.85 billion. Futu booked the impact in first-quarter results, which drove net income down 61.2% year over year to HK$831.0 million (US$106.0 million).
Futu says the amount does not hurt financial stability, and pre-adjustment net income would have been much stronger at HK$2.92 billion (US$372.7 million), and non-GAAP adjusted net income would have been HK$3.01 billion (US$384.0 million).
Still, investors cannot simply look past a regulatory action tied to the company’s historic mainland China business. The exposure is meaningful. The company has already stopped account opening for mainland Chinese identity holders. Management said mainland China-funded accounts represented about 13% of funded accounts, around 17% of client assets and roughly 20% of revenues. Restrictions could weigh on future activity, making near-term earnings harder to forecast.
Competition Adds Pressure for FUTU
Competition is another pressure point. Hong Kong remains Futu’s core strength, but banks, brokers and fintech platforms are pushing harder into online trading and wealth products. Customer acquisition costs are already rising, with selling and marketing expenses up 21.3% year over year.
New areas such as crypto, prediction markets and Korean stock trading may help engagement, but they also bring execution and regulatory risks. PantherTrade, Futu’s virtual asset exchange, received its Hong Kong VATP license, but crypto remains a young and tightly watched market. For now, these growth options do not fully offset the uncertainty tied to mainland-related activity.
Valuation Needs a Bigger Discount
The valuation also needs a higher risk discount now. A fast-growing broker can deserve a premium when rules are clear, and earnings quality is improving. Futu’s operating business is healthy, but the share price plunge shows that investors are now pricing in a less certain path. Until the mainland impact is clearer, the stock looks more like a value trap than a clean rebound story.
Futu stock is trading at a forward 12-month price-to-earnings of 10.22X, slightly above its industry’s average of 9.92X but below its one-year median. Futu stock is also currently trading at a reasonable discount compared with its industry peers, Robinhood Markets and Interactive Brokers Group. This valuation disparity might not be as favorable as it seems. Robinhood Markets is trading at a forward 12-month price-to-earnings of 46.33X, while Interactive Brokers Group is trading at 35.39X.
FUTU: Valuation
Image Source: Zacks Investment Research
FUTU’s Estimate Revisions Also Depict a Bleak Outlook
Over the past 30 days, earnings estimates for both 2026 and 2027 have been revised downward, signaling a bearish outlook from analysts.
Magnitude – Consensus Estimate Trend
Image Source: Zacks Investment Research
Final Verdict: Sell FUTU Despite the Strong Platform
Futu remains a high-quality platform, but high quality does not always make a stock worth owning. Revenue growth, account additions and overseas expansion are real positives, and the investment-grade rating helps calm balance sheet concerns. Still, the regulatory issue has introduced a level of uncertainty that investors should not ignore.
For investors, FUTU now looks more like a risk-management decision than a bargain-hunting opportunity. The stock may rebound, but the path is less clear now. With earnings visibility reduced and regulatory issues, the better call is to sell FUTU stock.
At present, Futu carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.