The London Stock Exchange (LON:LSEG) share price continued its uptrend even as the company faces the potential for another delisting. The stock jumped to a high of 8,965p on Wednesday, its highest level since March 2021. In all, it has soared by over 47% from its lowest point in 2022.
Another delisting looming
The London Stock Exchange has come under a lot of pressure in the past few years as the number of new listings dropped. Earlier this year, the company missed the opportunity of listing Arm, one of the biggest semiconductor companies in the world. Arm was eventually listed in New York, where it is valued at over $65 billion.
A few years ago, the LSE lost the biggest mining company in the world when BHP shifted its listing to Australia. And earlier this year, the exchange lost CRH (LON:CRH), one of the biggest players in construction materials globally. It listed in the United States, where investors are valuing it at over $44 billion.
Ferguson, which is a giant plumbing company, delisted from the LSE and is now valued at $35 billion in the US. Other companies have also considered moving from the London Stock Exchange. Energy giant Shell (LON:RDSa) was considering jumping ship in a bid to bridge the valuation gap with its American peers like Chevron (NYSE:CVX) and Exxon (NYSE:XOM).
Now, the exchange is on the cusp of losing Tui, the biggest tour operator in the world. In a statement, the firm said that it was under pressure to end its dual-listing structure and focus on its Frankfurt market. The management has observed that the liquidity in Germany is becoming higher than in the UK.
Losing Tui will be a big blow to the LSE because of its big market cap of over 3.2 billion euros. It is also a big player in the travel and hospitality business in Europe. The move could also trigger an exit of other companies listed in the exchange.
LSE is still doing well
The London Stock Exchange is still doing well despite these challenges thanks to its huge data business. In its third quarter, the company said that its post-trade revenue rose by 14% to 286 million pounds. It capital markets and data and analytics revenue rose by 1.6% and 1.9%, respectively. In total, revenue rose by 3.2% to over 1.96 billion pounds.
The London Stock Exchange is able to do moderately well because of its pivot away from its listing business. This pivot accelerated when it acquired Refinitiv from Thomson Reuters in a $27 billion. This buyout helped propel it to a major competitor to companies like FactSet and Bloomberg, which generate stable subscriptions.
This explains why the LSEG operates at a higher multiple than its peers like Deutsche Boerse (ETR:DB1Gn) and Euronext. Still, it has a long way to catch up other data providers like S&P Global, MSCI, and FactSet Research.