Time For Neteller Investors To Cash In Chips
The awesome growth at the online money transfer group Neteller, one of the biggest companies on the Alternative Investment Market, continues. Yesterday it unveiled a set of full-year figures which can only be described as outstanding. Sales rose 108 per cent to $171m (£98m), pre-tax profits soared 114 per cent to $98m while the all important cash-flow figure jumped 49 per cent to $114m. Is there no end in sight to the company's growth?
Its chief executive, Ron Martin, says not for a long while. He points out that in North America, where Neteller gets more than 80 per cent of business, sales remain strong and continue to rise. Meanwhile, in Europe and Asia, where the company's operations are in their infancy, revenues are on a steep upward trajectory. To give these an extra push Neteller plans to launch services in four European languages.
The group's key customer base is online gaming it provides an "e-wallet" for gamblers to use when playing Online Poker and other games via the web. Eighty-five per cent of revenues relate in some way to the industry and its popularity has fuelled the bulk of Neteller's financial success. Here the company competes against the credit card companies such as MasterCard and has been doing rather well recently as site operators such as Sportingbet (which runs Paradise Poker) have increasingly promoted its services to punters.
The downside to all this is that the US authorities intensely dislike online gambling. In fact, there are several bills prohibiting the practice awaiting approval from Congress. Whether any of them make it on to the statute book remains to be seen but clearly this represents a significant risk to Neteller. As does the possibility of growing competition the online money transfer sector hasn't particularly high barriers to entry.
Hence it is no surprise that in November the company's founders sold £218m worth of their shares at 625p. Since then the stock has risen and closed at 707p yesterday. Anyone who bought in at Neteller's 200p float would do well to follow their lead and take some profits at current levels.
