The Chips Are Down for PartyGaming

The Chips Are Down for PartyGaming - at www.moneyweek.com - the best of the international financial media

John Stepek
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in Features

"Is online poker running out of steam?" asked John Foley on Breakingviews.com. Online gaming giant PartyGaming, which came to market as London's largest initial public offering for 5 years in June, saw shares fall 33% after first-half results disappointed investors.

Revenues grew 81%, while operating profits surged 71%, excluding flotation and share sale costs. But the group had to admit that "the market isn't growing as fast as it hoped" and it is set to miss "the optimistic forecasts" that helped drive the IPO. PartyGaming blamed the slowdown partly on the World Series of Poker tournament, which usually boosts summer earnings, being staged later this year.

But a more worrying problem is that players are spending "less time and money on its sites". The amount spent per player fell 9% year-on-year, while the proportion of new subscribers who stop playing within the first six months rose to 66% during the first half.

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"Despite the caution in these results, online gaming as whole is not a busted flush," said Lex in the FT. But it was "a wake-up call" as to PartyGaming's "narrow focus on US online poker" the site derives 94% of revenues from poker, and 86% from the States.

Despite the plunge, PartyGaming is still on track to join the blue chip FTSE 100 index this month. The latest quarterly reshuffle was based on Tuesday's closing prices. At 105p a share, the company is still worth "around £4.2bn" said Reuters, which makes it the UK's 65th largest company "comparable to the size of brewer Scottish & Newcastle".

John Stepek
John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.

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