Goodbye Rosie, Hello Corona: See Both Stocks and Play Downed By The Fool's Card
Published April 2, 2020 by Lee R
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.
