Analyzing the shares of leading companies in the sector

The shares of 888 Holdings PLC (January 2024): negative trend, adjustments in spending and workforce

One of the ways to approach the reality of the sector, both online and in-person, is to have a detailed and up-to-date monitoring of the actions of publicly traded companies in the major stock markets. Taking advantage of the recent news about the decline in revenue and its immediate impact on the workforce, we examine the current situation of the shares of 888 Holdings PLC on the London Stock Exchange.
* The content of this article is provided solely for informational purposes to understand the situation of some relevant companies in the land-based and online gaming sector.

The current CEO of 888 Holdings, Per Widerström, has been clear in anticipating what the year 2024 should be like. The successor to Israeli Itai Pazner stated that the performance of William Hill 888 "must improve" and that the concerning drop in revenues in 2023 can be neutralized in the coming months.

However, for this to become a reality, shareholders and investors believe that some threats must be addressed, especially those that could put pressure on the numbers of William Hill in the UK, the part of the company that could be most affected by new regulatory requirements, such as affordability checks.

The online division's revenues in the UK and Ireland fell by 8% year-on-year in the third quarter, reaching £658 million, while retail store and betting point revenues in the country improved by 3%. In addition, nearby regulated markets like Spain or Italy performed well.

The consequences of these poor results in 2023 led 888 to implement an aggressive cost reduction program of £30 million, which particularly affected employees of the 888 brand in Israel and in its regulated markets.

The next examination of the financial health of 888 Holdings will be in March when the aggregated results for 2023 are presented along with the plan for 2024-2026. Until then, we will explore how experts and financial media view the company's shares, which are listed on the London Stock Exchange.

About 888 Holdings shares

Regarding 888 Holdings' shares, they have been trading on the London Stock Exchange since mid-2005, when its flagship brands were Casino-on-Net, Reef Club Casino, and Pacific Poker. The company had already been established in Gibraltar for two years, and since investors were able to buy and sell shares of the company, 888 became one of the leading operators in the online sector.

In its history of significant moments, there are notable spikes coinciding with the many rumors that circulated from 2008 to 2022 (the year of the merger with William Hill). Ladbrokes, GVC (Bwin) were mentioned as possible buyers of 888, causing price increases of up to 30% in a short period."

The price of the stock as of today, January 26, is around 83 pence (GBX), with a decline close to 25% over the last six months and a -10% compared to its price a year ago. However, it was precisely after the Covid pandemic and with its acquisition by William Hill confirmed when the stock reached its all-time high, surpassing 403 pence.

Fundamental Analysis of 888 Holdings

The bad news in the form of falling revenues in 2023 has led to a wave of layoffs, particularly affecting employees of 888 and WH. Investors have reacted pragmatically, and these cuts have not stopped the decline in the stock price, considering that shedding human capital might affect future growth and profitability, especially since numerous successful executives have left the company since the merger with William Hill.

The fundamental analysis, i.e., the investment approach that evaluates a company's financial status based on its results, economic factors in the sector, and macroeconomic factors, does not identify 888 as a corporation with solid prospects and believes its shares could continue to suffer and are unlikely to recover.

The negative change in the stock price coinciding with the first anniversary of Itai Pazner's departure, ousted from his CEO position following the scandal of accounts in the Middle East and Asian markets, is not a good sign considering that 2024 still points to more restrictive legislation, implying greater risk in achieving higher returns in key markets such as the UK for 888 and William Hill.

It is also considered that 888 Holdings is losing ground to its rivals, and in this scenario of cuts, will not be able to meet the necessary investments deemed necessary to acquire the coveted (but expensive) licenses in Brazil and approach other markets soon to be legalized in Latin America and Africa.

Technical Analysis of 888 Holdings

Technically, experts agree that the significant decrease in the value of the shares indicates a bearish trend in the stock price.

Investors seem to think that this trend aligns with the overall market conditions, but at the same time, they are much more optimistic about competitors like Flutter Entertainment, which also showed a decrease in their revenues at the end of the third quarter of 2023 but has seen its shares rise by 15% in the last four weeks.

The trading volume, which is the variable that gives an idea of the liquidity of the stock, remains moderate; indicating that the traded shares continue to fall compared to 2022. Therefore, the change in the trend seems clear.

The constant loss of levels considered as support places 888 Holdings in a bearish trend for most analysts. In any case, investors in long positions are also reconsidering their strategies and in significant cases have opted to sell, to acquire shares of other gaming corporations or to completely exit the sector.

The technical analysis of 888 Holdings plc in most specialized website analyses shows a pessimistic trend in the short, medium, and long term. Only fundamental news could bring significant changes, such as if after the parliamentary debate in the UK, the project for affordability checks is softened.

In summary, the decrease in revenues and the negative trend in terms of profitability in regulated markets suggest caution with this value. However, the next financial reports in March and the legal conditions of various markets could again offer opportunities to buy, as the price of 888's value would bounce upwards.
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