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PartyGaming Shares Plunge as Growth Rates to Slow



Printer Friendly VersionPost a CommentTell a Friend about this Article06 September 2005
As reported by: Bloomberg News
Shares of PartyGaming Plc, the online poker operator that sold $1.9 billion of stock in a June initial public offering, fell as much as 28 percent to below the IPO price after the company said growth rates are slowing.

The stock dropped as much as 43.75 pence to 113 pence in London, wiping about 1.8 billion pounds ($3.3 billion) from the company's market value. The shares, which were sold to the public at 116 pence each, were at 117 pence at 10:08 a.m. local time. Stock of competitors including Sportingbet Plc also fell.

Revenue is rising at a slower pace as companies such as Sportingbet enter a market that grew to $1 billion in 2004 from $90 million in 2002, according to Christensen Capital Advisors. Christensen estimates growth will slow to 60 percent in 2006 from 130 percent in 2005, and to 30 percent in 2007. The industry has swelled as more people play games such as Texas Hold'em and Omaha on line.

"There were some clear dangers in relation to the valuation of this company and our concerns have been realized," said Henk Potts, a London-based fund manager at Barclays Private Clients, which manages $45 billion. "PartyGaming is all about its growth potential, and some investors decided to bet on the growth rather than consider the potential slowdown."

Profit rose 25 percent in the first half, PartyGaming said today in a statement, as revenue gained 81 percent. The company incurred costs of $62.3 million related to its stock sale.
Article By: Bloomberg News

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