 |  | | | | PartyGaming Feels Plunge in Shares 7 Sep 2005
Shares of PartyGaming Plc, the online poker operator which sold $1.9 billion in stock in an initial public offering in June, fell as much as 28 percent to below the IPO price after the company witnessed slowing growth rates. This is a surprise for the successful online poker operator.
The poker operator's stock dropped as much as 43.75 pence to 113 pence in London, wiping about 1.8 billion pounds ($3.3 billion) from the company's market value. The shares, which were sold to the public at 116 pence each, were at 117 pence at 10:08 a.m. local time. Stock of competitors including Sportingbet Plc also fell. Profit rose 25 percent in the first half, PartyGaming poker operator said today in a statement, as revenue gained 81 percent. The online poker company incurred costs of $62.3 million related to its stock sale.
Revenue is rising at a slower pace as companies such as Sportingbet enter a market that grew to $1 billion in 2004 from $90 million in 2002, according to Christensen Capital Advisors. Christensen estimates growth will slow to 60 percent in 2006 from 130 percent in 2005, and to 30 percent in 2007. The industry has swelled as more people play games such as Texas Holdem Poker and Omaha Poker at online casinos.
'There were some clear dangers in relation to the valuation of this company and our concerns have been realized,' said Henk Potts, a London-based fund manager at Barclays Private Clients, which manages $45 billion. 'PartyGaming is all about its growth potential, and some investors decided to bet on the growth rather than consider the potential slowdown.'
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