Playtech shares suffer a drop due to poor Asian reports
Playtech PLC shares saw the drop of about 30% this summer since the top-tier developer recently lowered its revenue forecast due to the increased competition in the Asian market.
The shares of Playtech PLC reached the 5-year lowest price of £5.3. The shares fell on the London Stock Exchange after Playtech issued a warning that their full-year revenue would be hurt by a highly competitive market in Asia.
“Given the recent decline and in the absence of any change in market dynamics, we expect a significant impact on revenue throughout the rest of the year,” the company said.
Poor Prognosis Turning True
Investec analysts warned earlier this year, the drop could reach more than 25% of the daily revenue in the first half of the year which will reduce the expected revenue from the Asian market for €70 million for the whole year.
Their prognosis came true unfortunately and the drop was even higher. Playtech reported a 38% year-on-year drop in adjusted net profit on a constant currency basis to €83.3 million in the first half.
“Clearly the recent trading performance in Asia is disappointing,” commented Mor Weizer, the CEO of Playtech.
“Aggressive pricing environment is being actively presented as the main cause of the underperformance in the Asian market.”
Playtech didn’t provide a break up of its Asian business since the overall performance is in line with its expectations. If we look at Playtech’s overall performance, they showed a 7% increase in year-to-date average daily revenue and they expect to earn between €320 and €360 million this year before taxes, depreciation and amortization. In 2017, Playtech’s EBIDTA was €322.1 million.
Keep the Chin Up
Since its inception in 1999, Playetch established itself as an innovative provider who cares about the customer experience and uses its expertise and technology to distinguish itself from the rest of the market.
The company employees over 5,000 people, has offices in 17 countries and possesses 140 global licenses. They provide software and services for online bingo, poker, sports betting, mobile gaming and other online casino games.
Earlier this year Playtech pursued a deal with Italian betting and gaming firm Snaitech for €291 million.
Playetch made the deal in order to reduce its exposure to regulated markets and after a profit warning issued at the end of 2017, saying that earnings would be marred by a crackdown on gambling syndicates in one of the largest Asian markets, Malaysia. In July, Playtech launched custom-tailored live dealer studio exclusively for Betford which is a step forward in the expansion of their live dealer offering.
We’ll have to wait and see what will be the Playtech’s fate since Jason Ader recently accumulated 5% of the company and has publicly criticized the way in which the company is led. Reportedly, he’s trying to push Playtech to asset disposals or a sale of the company.