Review of the Year: Share prices slump
eGR looks at the ten biggest talking points of 2011.
This year has been particularly hard on a number of leading operators whose share prices have taken a battering over the last 12 months thanks largely to negative investor sentiment on the back of increasingly uncertain regulation.
According to equity analyst David Jennings of Davy, industry stocks have fallen by an average of 13% in 2011, with several operators including bwin.party, Betfair and Sportingbet suffering more than most.
Betfair suffered perhaps the highest-profile fall seeing its share price halve by August, only 10 months after listing. However, its first half figures for the year, released earlier this month, showed a marked improvement, with a price of 826.5p a share, 45% up on August’s 567p low.
Newly-formed bwin.party also suffered a sharp share price fall following unworkable proposals to regulate sports betting in Germany. The company’s share price fell by 16% in a day, and in total almost a third of its value was wiped out in 48 hours.
Paddy Power has consistently been the highest-performing operator over the past two years, with the share price growing around 32% this year alone. A 5.2% drop in its share price on 9 December was seen as a surprise by many, and was attributed to Bank of America’s downgrade of the company from “neutral” to “underperform” on fears over future UK gambling tax changes.
James Hollins of Evolution Securities described the operator as the “star performer” in the industry, but William Hill, Betsson and 32Red have also performed admirably in 2011, with a £100 investment in 32Red yielding a £211 return.
However, with an uncertain regulatory environment, with continuing difficulties in France and unfavourable regulatory frameworks proposed in Greece, Germany and elsewhere, it is likely that industry valuations will not pick up for some time to come.
The key news on share price fluctuations in 2011:
bwin.party down sharply on back of German sports betting proposal