888 Holdings’ share prices have increased 77% over the past 25 months and doubled since January 2015. 888 stock has outperformed industry predictions after the global online gaming brand failed on multiple merger negotiations.
888 Holdings lost a highly publicized bid-off with GVC Holdings to merge with bwin.party. The negotiations went back and forth, with 888 Holdings thought to have a deal at one time. When the bwin.party merger failed to happen, many predicted it would leave 888 at a serious disadvantage versus a more consolidated market.
Estimates after the Bwin.Party Deal Fell Through
After the bwin.party negotiations, 888 sought other acquisitions (William Hill) which did not happen. Many wondered whether 888 Holdings could prosper without consolidation with other gaming sites, leaving some to wonder if 888 eventually would not be a target for acquisition. That talk now appears to be idle.
The share prices increases can be attributed to the best of factors: organic growth. When a company’s growth has plateaued, it needs acquisitions to spur growth and wow potential investors. When a company is shrinking, its executives begin looking for a buyout to fix whatever problems the company has. 888 Holdings, which owns 888poker, 888casino, 888sports, and other properties, has been steady and remarkable over the past two years-plus.
Double-Digit Growth for 9 Quarters
Since the beginning of 2015, 888 Holdings has shown double-digit growth every single quarter. That growth is all-the-more impressive, because many of its UK-based or Gibraltar-based competitors have struggled in the wake of the Point-of-Consumption Tax in the United Kingdom.
888casino and 888sports have shown the greatest growth. 888 Casino is the dominant division for the company, so its 26% growth over the past two years is less of a surprise than some of the other financial news. The 57% growth in sport is a huge revelation, especially after the bwin.party deal did not happen.
Meanwhile, the company’s poker division is down 3.5%. That loss is not as stark as one might imagine, because the global popularity of poker has taken a hit in the past few years. At one time, the Poker Boom drove growth of many online gambling companies. Now, PokerStars dominates the online market, while Las Vegas brick-and-mortar casinos are closing or down-scaling poker rooms. Bingo revenues increased 7%, which is a healthy mark.
Itai Frieberger on Regulated Markets
888 Holdings’ CEO Itai Frieberger said that the growing regulation of the online and mobile gambling industry has been key to 888’s success. Mr. Frieberger said that most unregulated countries in Europe will regulate their gambling industries in the coming years. The Czech Republic and the Netherlands regulated their online gambling markets over the past few years, while Spain, Italy, and Romania continue to open their markets to UK companies.
Full regulation in Germany and France would be the big prize for European online gambling operations like 888 Holdings. While either of those seem like they might be pipe dreams for the next few years, Itai Frieberger suggests that most countries will legalize online and mobile gambling, and those are a key part of today’s Europe.
Frieberger said that companies which focus on unregulated markets often struggle when a country regulates its gaming sector. He said, within 5 years of regulation, the unregulated online casinos and poker sites tend to lose significant market share. Mr. Frieberger noted that the purely unregulated casinos tend to lose their player community within 5 years of regulation.
72% Revenue from Regulated Markets
For that and other reasons, Frieberger said that 888 Holdings maintains a large percentage of its operations in regulated market: 72% at the moment. The remaining 28% of 888’s revenues come from unregulated markets. In regions with a ban on online gambling, such as Turkey, 888 Holdings simply does not operate.
In short, 888 Holdings is growing the right way. The company also appears to have room for more growth. In the UK sports betting market, 888sports only holds about 1.5% of the market share. That leaves a lot of room for growth.
In More Countries than William Hill or Ladbrokes
So does the sheer scope of 888’s operations. Compared to major UK competitors like William Hill and Ladbrokes, 888 has a presence in twice as many countries. That diversification means 888 Holdings is well-positioned for any growth spurts in markets abroad, while holding a position that could increase in the world’s top markets.
Having successful brands in a variety of gambling niches also helps. Once a person signs up for 888casino, they are much more likely to gamble on 888sports or 888poker. Synergy works wonders for companies that focus on multiple forms of gambling, because some poker players are also sports gamblers, and vice versa.
Moving forward, none of that precludes 888 Holdings finding acquisitions which help with synergy in a wider sphere. One of the reasons a poker website merges with a sports betting site is the kind of synergy 888 already has. But mergers and acquisitions could rapidly grow 888 Holdings’ market share in key regions.