Gambling Stocks Also Hit in CrunchPublished November 5, 2008 by OCR Editor
The world toxic debt crisis and its associated credit crunch have affected gambling stocks in a big way.
Often the first to rise in bull markets, gambling stocks have been hit hard by the recent stock market collapse.
It takes a lot to discourage investors from betting on gambling stocks, but the recent credit crunch and stock market collapse have done just that. With capital reserves being soaked up by the hour, and a lack of short-term liquidity, investors have sold stock for cash, waiting until the international financial situation becomes more stable.
As gambling companies feel the pinch themselves, their plans for expansion have been put on hold. Stocks in online as well as land-based gambling companies have plummeted to new lows as investors either switched into traditional blue chip stocks or into safer havens of cash or gold. Only time will tell when the markets will improve and the investors once again jump back into leisure and gambling stocks.
What the future holds
Recent falls in the stock prices of online gambling companies is also likely to affect those companies' credit ratings. This will have a knock-on effect where even AAA companies are finding it difficult raising cash for development projects. Companies dropping below the magic AAA level are likely to have even greater difficulty raising cash. With a global recession on the cards, things could get worse before they get better.