888 Shares Disappoint Investors On Their Market Debut
88 saw its shares crash below their flotation price on the first day of dealings yesterday, capping another dire day for internet gambling stocks in which PartyGaming, the giant of the sector, hit a new low.
888 priced its shares at 175p, giving it a market capitalisation of £590m, below the £800m it had seen as possible. However, even the reduced price provoked selling and the shares, which achieved 180p in the first hour, closed at 170p.
Chief executive John Anderson admitted PartyGaming's warning earlier this month of a slowdown in online gambling had upset both valuations and sentiment.
"There is obviously a lot of volatility in the last few weeks but we are focused on tomorrow," he said. "Our owners have sold only 25% of the business and we are driving forwards. We are getting stuck in. You can't control the market on a day-to-day basis, so we will concentrate on running the business."
PartyGaming, owner of the Party Poker website, was the biggest faller in the FTSE 100 index, tumbling 8% to 87.5p, compared with June's float price of 116p. Confidence in the company has been further undermined by rivals' persistent claims that they have not experienced the same slowdown in July and August. 888 joined the dissenters, with Mr Anderson describing PartyGaming's warning on trading as "company specific" and adding: "I have checked and rechecked our numbers."
888's flotation created another batch of dotcom multimillionaires, this time among the company's Israeli founders. Avi and Aharon Shaked will receive £103m from selling a quarter of their 70% stake.
About two-thirds of 888's revenues come from traditional casino games, such as roulette and blackjack, and a third from poker, where it owns the Pacific Poker site. Mr Anderson said there are about 1,000 online operators across both forms of online gambling, but predicted major consolidation ahead.
"In three to four years I don't think you will recognise the industry," he argued. "There will be a handful of big players - and customers who really trust them - and there will be a bigger pie."
