Playtech Stocks Hurt By Profit Warning
Despite growth in many sectors around the globe, Playtech have issued a profit warning for this financial year. In fact it appears that they are projecting a figure 5% below the lowest market expectations. This is quite a blow to investors, stakeholders and the company as a whole.
The warning resulted in the company losing almost a fifth of its value on the FTSE 250. Shares now hover around £7.71. What has exacerbated this drop is the fact that the company stocks hit a record value of over £10 in June. A nearly £3 drop naturally shocked the market but for now it seems things have stabilized and are not set to drop further.
Playtech has issued a statement that market figures will stabilize but they do not see that happing in 2017 before year-end. A company statement referred to “changing market conditions” in Asia hurting the company. We can assume that Playtech’s expansion plans in the region fell through.
The company stated that the contribution to revenue from Asian regions would be reducing over time. It can be assumed that the company has scrapped all plans for expansion into Asia and will be steadily removing their business ties and assets from the region.
Deals That Failed To Inspire Investor Confidence
An additional blow for the company was the failure to launch of their Sun Bingo site. This potentially lucrative deal was signed with the Sun newspaper. This tabloid is one of the most widely read papers in the UK, but the reasons for the delay were not clarified. Playtech simply stated that the issue stem from a “lengthier seasonality” and the fact that the site had to be re-launched.
It is not all doom and gloom however. The company’s B2B business in non-Asian regions has grown consistently and organically well within market projections. The company has also seen a string of acquisitions that has helped with growth and meeting strategic targets.
We are hoping to see the company’s stocks stabilize in the coming weeks as investor confidence returns. It is possible that this sharp drop could have been exacerbated by the fact that most investors expected an increase in profits following the very positive results the company posted in the first two quarters of this year.
It is possible that the company overreached a bit with these strong figures since the Asian expansion fell through and the so far unimpressive performance of their Sun Bingo business should not have damaged the company as much as it has.
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