Goodbye Rosie, Hello Corona: See Both Stocks and Play Downed By The Fool's Card

Published April 2, 2020 by Lee R

Goodbye Rosie, Hello Corona: See Both Stocks and Play Downed By The Fool's Card

The prosperous rise of iGaming has been blighted by Corona in more ways than one.

No one ever said gaming shares would be Corona-resistant, let alone immune.

Overall Drops

Standard indices from March 16th such as Dow Jones Gambling Index, which hosts shares of the largest gambling businesses on the New York Stock Exchange, fell 17.5% to its lowest point since 2012: 449.88 points.

Not so Sudden

The brown-outs from Corona closures appear to be only the culmination of precipitous fall-offs over the last few months.

William Hill's Fade

Last week's suspension of major sports drove William Hill share prices down 25.5% to £0.66 (€0.72/$0.81) at the close of trading in London with a day low of £0.57.

The latest developments wiped two thirds of share value away, and an unfathomable 80% in under a year, resulting in the suspension of 2019 dividends as a result of the material impact on revenue and earnings “to retain financial resources within the business.”

Previous Pains

WH was already absorbing a gut-punch from the UK's imposition of a £2 stake limit on fixed-odds betting terminals (FOBTs)--in the form of a 2019 £32.7m revenue loss.

Fluttering Off

Among other operators, share prices on May 16th for Paddy Power Betfair and Fanduel Owner Flutter Entertainment fell 12.2% to £56.84, rallying from a low of £50.30—after the gaming operator's warning that Corona cancellations posed earnings declines of up to £110m pre-EBITDA.

Flutter has adjusted earnings estimates based on a projection of no further puntable sporting events until the end of August.

Flutter's future merger partner Stars Group saw shares fall 17.7% to CAD$19.08 (£11.17/€12.22/$13.63) after opening at CAD$18.85.

At the Precipice

The PokerStars and Sky Bet operator said while quarterly earnings are ahead of expectations, Corona's “material impact” had yet to be assessed.

Ladbrokes Smoked

Ladbrokes Coral operator GVC Holdings estimates a revenue hit of some £150m (€166.1m/$184.6m) for sports event cancellations; under the assumption of all football being postponed until July 2020, with the 2020 UEFA European Championships already pushed back to summer 2021.

In Comparison

Ladbrokes Coral share prices fell 60.0% barely a month; Tabcorp’s share price fell 12.1% to AUD$2.90 (£1.46/€1.59/$1.78) even with spectatorless events; Unibet operator Kindred shares fell 11.6%; 888 shares dropped 12.5% to £0.84.

Across the Pond

Land-based casino closures across the United States dropped MGM Resorts International shares 22.3% to $12.00 ($9.83/€10.75).

MGM's Sad Cinema

First spurred by Corona hitting Macao off of mainland China, MGM’s share price has fallen 64.6% since 12 February; while Caesars Entertainment shares fell 22.2% to $6.60, less than half of its value a month ago.

Doubling Down

In the UK and US, share drops were generally somewhere in the mid teens, still doubling the Dow Jones Average of 8.4%.

Supplier Shares Cutting Off

Suppliers of gaming technology fared no better, with Scientific Games leading the discharge with a 30.4% gut punch to $6.08, for a total fall of 79.9% since 12 February.

Playtech’s share price fell 10.6% to £1.58, with losses driven by the cancellation of its latest Italian acquisition Snaitech from March 10th, for a greater decline of 49.2% from 21 February to 12 March.

International Game Technology (IGT) over the counter shares fell 12.7% to $5.59; Kambi shares fell 10.8% to SEK77.65 in Stockholm; and Inspired Entertainment down 4.5% to $4.80.

Protect Remaining Interests

With no sports to bet on, how casinos treat their imperiled employees during the cease-play may be a key factor in Corona's as yet undiscernable rebound phase.

Contemporary Punting Opportunities

Betfair and other top UK sites have seized the moment by offering bets on the coronavirus, including which events will be canceled, will the Tokyo Olympics move ahead; the direction of plunging financial markets and the direction of resulting exchange rates--with odds fluctuating wildly across the board.

Corona has also played havoc with Trump's odds for re-election, dropping them like a...um...lean out your window and say it!!!

Outlook

Either way, punters are always going to find something to bet on, and betting shops are going to find a way to offer odds. How much trust anyone has for the performance of shares of gaming companies on the open market represents a whole other marketplace dynamic even more sensitive to risk. What we have learned is that Corona's causal economic strife has reduced all forms of play, be it in a casino or on the stock market.

See also

Hello Casino Now in UK After White Hat Gaming Deal

Hello Casino's Friendly Wagering Requirements

Online Gaming Stocks - Still Risky

Malta Defines Official Policy for Increased Protections Against Vulnerability in the Time of Corona

Gambling Stocks Get Bush Boost


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