Party Poker Float

nesf

Possibly more suited to Investments, but I thought some here would be interested.

Reuter's Article - Party Gaming starts biggest float in five years.

Stong investor confidence and all that jazz. Although, it's a nice example of how online gambling/poker has grown over the past few years, into a serious player in that market.

Whether the stock is overvalued or not is a moot point. It's the public interest shown that strikes me as being the important part. People seem to accept that online gambling is not only viable but worth having a piece of.

That or they are amused by the novelty of a .com which was making money before it's public float

ionapaul

Belief that online poker will continue to grow exponentially is built into their share price, at least for those who drove the price up immediately after start of trading. I personally would be extremely sceptical of the forecasted future growth in this market. That said, I believed the same thing about Google's forecasted growth and the market proved me wrong!

And they do say invest in what you know...

nesf

ionapaul wrote:

And they do say invest in what you know...

Well, yes and no


I agree with you however, it is at the moment, a profitable company with decent earnings. It is very early to be calling the market on it, but I would think that the company is fairly solid as an investment. Although it's present share price is far from optimal. Then again, any public float of a "popular" company will tend to drive up prices "artifically".

A few points would make me cautious:

This might turn out to be a "fad" investment wise.

There is no track record really for net gambling so any long term analysis is going to be very inacurate.

I personally don't like "jumping on bandwagons" at public offerings and the like. I would prefer to see how Party does over the next 12 months before I'd consider taking any sizeable position in it (from a medium to long term perspective).


The reason I posted this here was, I'd be interested to hear opinions from other internet poker players on whether they think the present growth in the industry is sustainable or if it is just another internet fad (ie if in a few years that the number of casual players will drop dramatically).

Dub13

nesf wrote:

There is no track record really for net gambling so any long term analysis is going to be very inacurate.

I agree,but things like this were there is no past analysis is were the big money is to be made and lost.We could all be sitting hear this time next year saying we should have put money in....or not.Its the lads with the balls that will do it now,and take the hit or the profit.Its a thin line between success and failure.

PADDYPOKER

Oversubscribed 3 times.
Shares up 10% at lunchtime.

nesf

Dub13 wrote:

I agree,but things like this were there is no past analysis is were the big money is to be made and lost.We could all be sitting hear this time next year saying we should have put money in....or not.Its the lads with the balls that will do it now,and take the hit or the profit its a thin line between success and failure.

Exactly, generally speaking "the biggest profits carry the biggest risks" investment wise.

I just personally wouldn't feel the need to take such a large risk. I can see why others would do so though. It's no disrespect to them, it's just I know how much risk I'm comfy with and try to stick under it.

If you know what I mean.

AmarilloFats

nesf wrote:

The reason I posted this here was, I'd be interested to hear opinions from other internet poker players on whether they think the present growth in the industry is sustainable or if it is just another internet fad (ie if in a few years that the number of casual players will drop dramatically).

Yeah was considering throwing a few quid at this!!! No feck all about markets, investing etc..
I am curious what factors to consider...I think poker off and online will become more and more popular..but there is little stopping the market being flooded with online poker sites. And unlike other services I cant imagine any loyalty amongst online players.. Perhaps brand and ****t like that comes into play a bit!!.. Ye can buy an off the shelf package now and haway ye go.Ye have yer own poker site.
Is this why the owners of partygaming have decided to float now??? make money now whilst it's still worth something?? It's making $100,000 an hour..and 65% is profit...

nesf

Brand will play a large role with "casual punters".

Imo they are a big cash cow for such sites and having a strong brand presence will be crucial in getting them started with you. By offering good top up bonuses and the like they might be able to keep their business.

*shrugs*

I'm no expert in this area though, so maybe my thinking is way off.

okidoki987

It's making $100,000 an hour..and 65% is profit...

Surely not?
65,000 an hour on a 24/7 site is $569,400,000 profit a year

karlh

yeah roughly correct, they cleared about 350mln profit last year afaik

ionapaul

Party don't need to offer the best top-ups or bonuses to remain successful, as even online, customer inertia is impressive and it takes a good deal to make the average player move sites / brands. The 'bonus whores' make up such a small % of the total online market that it would not be Party's long-term interests to offer the best and biggest bonuses. It is much more important to these sites to offer great start-up bonuses to capture the customers in the first place.

Again, I would be very sceptical of investing in online gambling, as I personally believe the peak of online poker / gambling will be reached in the near future and the optimistic forecasts that are built into the share prices ("the number of online poker players has doubled every 18 months since 2001!!!! according to our forecasts, by the year 2016 we will have over 12 billion customers and be the richest corporation in the galaxy!!!!" etc etc) are a little *too* optimistic. Once US college students start going off poker, watch the fallout. These stocks are far too risky for my style of investing and tolerance of risk.

Imposter

nesf wrote:

Brand will play a large role with "casual punters".

Imo they are a big cash cow for such sites and having a strong brand presence will be crucial in getting them started with you. By offering good top up bonuses and the like they might be able to keep their business.

Imo online poker players are a fickle bunch and the nature of the game means that players who take it anyway seriously are going to go where the better bonuses are as well as where the fish are.

By being a leading brand Party will attract a lot of newer players but it is loyal players that will make them the most money. They also have good bonuses at the moment but the nature of the bonuses (reload bonuses) aren't suited to keeping players loyal. Bonuses such as constant and decent rakeback schemes are probably the way to do this but that impacts on their profits.

Another factor to consider is the legal situation in the US. many commetnators have said that if the legal situation were to change to favour online poker that the big casinos and poker brands would get in on the act and that they wouls be much more ruthless in gaining a foothold. This could reduce the existing companies market share and as a result profits too.

califano

I subscribe to the law of contrary public opinion. If everyone thinks one thing, then I say bet the other way.

nesf

rounders123 wrote:

I subscribe to the law of contrary public opinion. If everyone thinks one thing, then I say bet the other way.

In the markets thats tantamount to financial suicide my friend

califano

nesf wrote:

In the markets thats tantamount to financial suicide my friend

Its just a quote i liked from 'Glengarry Glenross'

nesf

rounders123 wrote:

Its just a quote i liked from 'Glengarry Glenross'

Yeah, I like it as a quote too. Unfortunately it doesn't apply well to the markets.

I do however like it when applied to life in general

growler

Another factor to consider is the legal situation in the US. many commetnators have said that if the legal situation were to change to favour online poker that the big casinos and poker brands would get in on the act and that they wouls be much more ruthless in gaining a foothold. This could reduce the existing companies market share and as a result profits too.[/QUOTE]

It sounds far more like the legal situation could change not in favour of online poker in the US and presumably the pressure to make online gambling illegal may be driven not just by the nutter brigrade but also by US casino operators who may well see a large % of their traditional gambling vacation money going offshore to Gibraltar where the US govt can't tax them!

I'm a bit skeptical whether the US will actually attempt to restrict access to online gambling, A coz of the civil liberties issue and B because they'll sound liek Saudi Arabia. What they may do is try to figure out a way to tax it.

As for the projected growth, I think that given the amount of cash on offer any hold on market share is tenuous at best, anyone with enough cash could create a brand to challenge Party , so no guarantees. i also suspect that their is probably a limit to the number of people who actually like to gamble on cards, it's damn hard to judge how close to that number we already are, there may be only 17 untapped card players worldwide right now.

Imposter

growler wrote:

It sounds far more like the legal situation could change not in favour of online poker in the US and presumably the pressure to make online gambling illegal may be driven not just by the nutter brigrade but also by US casino operators who may well see a large % of their traditional gambling vacation money going offshore to Gibraltar where the US govt can't tax them!

That's very unlikely to happen as it's pretty much accepted fact that the growth that has been seen in online poker means there are more players playing in B&M cardrooms.

I'm a bit skeptical whether the US will actually attempt to restrict access to online gambling, A coz of the civil liberties issue and B because they'll sound liek Saudi Arabia. What they may do is try to figure out a way to tax it.

They already tax people who earn money from it. They'd be unlikely to get any taxes from an online company as they'd have to reduce such taxes to near 0% and that wouldn't get past the 'gambling is evil' brigade.

okidoki987

there may be only 17 untapped card players worldwide right now.

You can add a few of zeros onto that after the WSOP.
Happens every year after the WSOP especially if it's an internet qualifier that wins it. "I can do that, where do I sign up and off we go"
Another couple of thousand players on board.
The poker sites that advertise on US TV normally get the vast chunk of new players.

On the note of when you join you stay.
I joined Party, played for a couple of weeks and because of the horrendous bad beats ( and I mean horrendous), decided enough was enough and left.

mcaul

The $65000 per hour figure for party poker is income rather than profits. All expenses have to come off that figure first.

In my opinion it will do well for a few months or even a year before more and more sites offer better and better deals and customers start looking for best value. National regulational issues can also provide problems.