Playtech stock plummets 60 per cent following dividend payout
Playtech’s stock price has crashed more than 60 per cent following the payout of a special dividend worth close to two thirds of its market capitalisation.
The gambling software firm paid out almost £1.5bn as a special dividend from the sale of its Italian consumer arm Snaitech to Flutter during last year.
As a result, Playtech’s share price sank from 800p to just 316p.
“The share price change is about in line with the special dividend,” explained Ivor Jones, research analyst at Peel Hunt.
The City broker is still rating the stock a Buy, arguing that “Playtech is complex but worth the effort”.
“If one were to take 490p (the dividend) off our previous 1,000p target price, you would get to an implied 510p which implies a 62 per cent upside,” explained Jones.
The sale has left Playtech as almost a pure business-to-business player, whereas a year ago it was evenly dividend between B2B and a consumer focus.
Now, Peel Hunt said that most of the firm’s value comes from providing a technology platform for online gambling and the services needed to operate it, as well as its software as a service arm, which provides gaming content to operators in return for a revenue share.
“It has a sustainable business model, multiple investments coming to maturity, and a highly incentivised management team,” added Jones.
However, analysts noted that Playtech’s previous low last year was 442p, compared to its current share price of 316p.
In the group’s full-year results in March, Playtech managed to beat analyst expectations, as group adjusted operating profit came in at €480m compared to the €474m expected by analysts.
Expansion in the US was particularly strong, with revenue jumping 19 per cent to €252m.
Playtech also upgraded the value of its stakes in multiple other businesses, such as an €802m stake in Caliente (up from €730m last year) and a €141m stake in Hard Rock Digital (up from €77m last year).