Unless you have been living in a cave in Nepal you have probably heard about the financial crisis that has been going on since the 2008. For a while it seemed that the crisis might be already over, but during the last few months it has become very evident that we are still very far from the “normal” state of things. And naturally this has meant that loads of big companies have been getting killed on the stock market, and naturally among them have been some of the largest online gambling companies in the world. Next we will take a bit closer look at how some of the online gambling stocks have done over the last 3 months.
(For comparison, Dow Jones industrial is down 11.35 percentage during this time period, S&P 500 is down 13.2% and Nasdaq is down 12.94%)
Some online gambling stock performances in the last 3 months.
Partygaming – Down 31.32%
Despite of PartyGaming’s (PRTY) huge gain of 6.02% on Friday the stock is still down almost 1/3 of it’s value during the last three months. The biggest reason behind this is speculated to be the fact that the merger between Party and BWIN that some thought to be a sure thing is not going to happen after all. PartyGaming that for an example owns the gambling brands partypoker, partycasino and gamebookers is still trading at P/E of 18 which seems rather high in this economy.
888 Holdings – Down 63.14%
888 Holdings that for an example 888Casino and 888Poker is at the moment the heaviest hit online gambling company. For reasons that are not entirely clear their stock has lost almost 2/3s of it’s value over the last 3 months. The company is now trading at only 7.78 P/E.
UnibetGroup PLC – Down 37.7%
Unibet Group (main brand: Unibet.com) has also been hit badly over the last 3 months. The stock is traded in the Stockholm stock exchange and is down considerably more than the index during the same time period. Unibet that is powerhouse brand for an example in Scandinavia is now trading at around 13 year earnings.
Possible reasons for the fall of online gambling stocks:
New regulations, for an example France moved to license based system. While is makes offering online gambling for the French customers 100% legal it also increases the taxes considerably.
The overall down turn of the stock market, usually when the market goes pretty much every single company goes down.. this is regardless of how good / cheap the company in question actually is.
Gambling companies might have been over valued. Online gambling companies have traditionally traded between 15 to 25 P/E and even though gambling is most likely one of the best businesses there is, it still feels bit high considering how tough the competition is between these companies.
