IG Group Stock Tumbles on $1.3B Underdog Deal, Suspended Buyback

IG Group Holdings PLC shares plunged on Tuesday after the online trading platform announced a major U.S. acquisition and simultaneously suspended its share buyback program, sparking investor concern over rising costs and near-term earnings dilution.

The stock was trading down 8.1% at 1,342 pence, a company-specific selloff that occurred while broader U.S. markets posted gains.

Acquisition Overshadows Results

The market reaction was triggered by IG's announcement that it plans to acquire Underdog, a U.S. daily fantasy sports and prediction markets operator, for a total consideration of up to approximately $1.3 billion. The news came alongside the company's first-half 2026 results, which showed total revenue rising 18% to £642.8 million.

However, investors focused on the immediate financial consequences of the deal. Management announced the immediate suspension of its share buyback program to preserve capital, stating that repurchases are not expected to resume until 2027 at the earliest. The move removes a key mechanism that had been supporting the stock's valuation.

Margin Pressure and Muted Outlook

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Adding to the negative sentiment, the acquisition is expected to be broadly neutral to adjusted earnings per share in its first year and only become double-digit accretive by the third year, offering little immediate benefit to shareholders. The deal also faces regulatory hurdles, including a U.S. antitrust review, with completion not expected before late 2026 or early 2027.

Profitability also came under pressure in the first-half report. IG Group's EBITDA margin declined to approximately 44% from 49.6% in the prior-year period. The company attributed this margin compression to a 30% increase in operating costs, driven by higher marketing spend, technology investment, and non-recurring strategic review expenses.

Market Impact

The combination of a suspended buyback, near-term earnings neutrality, rising leverage, and shrinking margins created a confluence of negatives for investors. The sharp stock decline reflects the market pricing in these immediate costs and uncertainties against the longer-term potential of the company's strategic expansion into the U.S. market.