Partygaming in Barrons
Yesterday’s issue of Barrons had a negative article on a company that I recently wrote about, Partygaming, the owner of Partypoker. The article was mainly focused on the founder of Partypoker, Ruth Parasol, rather than the business implications of the anti-gambling legislation passed by the U.S. congress. Although, the article did state the obvious that revenue from U.S. players would be severely reduced, it didn’t delve into the current valuation of Partygaming shares. Just mentioning that “the outlook for this sector may well get worse in the months ahead, as the implications of the U.S. ban play through financial statements.” In fact, it seems the author had a negative bias even before writing this article.
As to the authors claim that Partygaming could face a potential cash crunch situation because of all the U.S. players cashing out, he conveniently forgets to mention the cash that the company will have earned since their last June 30 balance sheet statement. Before the U.S. legislation, Partygaming was earning $60 million dollars a month. That comes out to approximately $180 million at the end of September. This should be enough to satisfy the $192.6 million it owes its clients (not all clients are U.S. and not all will cash out). And from what I can see, the U.S. players aren’t cashing out just yet. As I’m writing this, 80,000 players are playing on Partypoker and most of them are from the U.S. And even if all these players cash out, as I mentioned in my previous article, I think Partygaming would still be a buy.
As to the authors claim that Partygaming could face a potential cash crunch situation because of all the U.S. players cashing out, he conveniently forgets to mention the cash that the company will have earned since their last June 30 balance sheet statement. Before the U.S. legislation, Partygaming was earning $60 million dollars a month. That comes out to approximately $180 million at the end of September. This should be enough to satisfy the $192.6 million it owes its clients (not all clients are U.S. and not all will cash out). And from what I can see, the U.S. players aren’t cashing out just yet. As I’m writing this, 80,000 players are playing on Partypoker and most of them are from the U.S. And even if all these players cash out, as I mentioned in my previous article, I think Partygaming would still be a buy.
posted by Amit Dhuleshia at 4:28 PM
2 Comments:
what is the procedure for me to buy shares in partygaming
i dont know too much about investing in stocks and shares, but im learning
i am based in south africa and dont currently have a broker
how do i do it?
james@balancenewmedia.com
The problem I see with investing in partygaming right now is the simple fact that, as a professional online poker player, success for partypoker was based on loyality. With the recent ban in the US, all of us US citizens were FORCED to jump ship onto other sites such as pokerstars. And with neteller projecting officially that they will discontinue cash transactions 270 days after the bill signing, the future looks bleak for online poker. Combined with the fact that the stock shows no support whatsoever and institutions are dumping it in the masses spells disaster for the small time investor. I loved partypoker/partygaming, but think the damage done is too great, and looks more like a short play than long.
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