888 Holdings shares soar as punters move to online gambling
Shares in online gambling firm 888 Holdings jumped more than 30 per cent after it said average daily revenue in 2019 was up 18 per cent.
888 said there had been evidence of increased customer activity in the group’s casino and poker products amid the coronavirus outbreak, which may compensate for the sports betting disruption.
However the online gambling firm was cautious and said: “In the event of a prolonged period of global macro-economic uncertainty, it is possible that consumer spending across the group’s online gaming product verticals may also become impacted.”
Other gambling firms have struggled in recent weeks as sports events across the globe were cancelled. Earlier this month, William Hill suspended its dividend after warning the postponement of key sporting fixtures would reduce its earnings by up to £110m.
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Similarly, Paddy Power owner Flutter Entertainment said it would take a £90-110m hit to full-year earnings if restrictions remained in place.
888 Holdings is less exposed to sports than its peers, as its sports brand accounted for just 16 per of its revenues. The firm said if the cancellation of sport events continues until September, it estimates a potential impact of “up to high single digit millions of dollars”.
The online gambling operator has a strong balance sheet with $99.5m of cash and cash equivalents at the 2019 year-end, and “the board is confident in 888’s ability to manage these challenges.”
The online gambling firm said that, with people spending more time at home and with potentially increased stress from economic uncertainty, it has a responsibility to remain vigilant on safe gambling and preventing gambling-related harm.
Russ Mould, investment director at AJ Bell, said: “The bounce could just be down to how investors’ relief that sport is just 16% of revenues. The share price had pretty much halved before today’s rally so a big drop in income was already factored into the stock’s valuation.”
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