Playtech Share Price Down 9.5%

Investors’ fears were sparked this week as coronavirus impact continues to propagate through the stock market. The casino games manufacturer Playtech has reported serious negative growth, with their share price falling by 9.5%. The downtrend in value is a stark reminder of the impact of the virus on key markets in Italy and China. Changes in customer patterns and lower amount of orders have all been attributed to the share price falling. We’ll unpack this and more in the paragraphs down below.

China economic downturn.

Due to the impact of the Coronavirus in two core markets, China and Italy, Playtech have experienced a massive shift in customer behaviour, thus, there share price took a 9.5% tumble this week as global investor anxiety heightens. ©geralt/Pixabay

Questions are being raised by senior management at one of the world’s largest gambling technology firms as major markets begin to shudder. The outbreak of coronavirus has made a significant impact on the 2020 growth figures already just 2 months in. But initial fears have quickly been quashed, as investors of Playtech were reminded by the company’s corporate leadership just how high-margin and cash-generative the firm has been over the previous 12 months.

Due to the last year annual revenue exceeding €1.5bn, Playtech will be in no mood to panic over the slowdown in growth this quarter. Prospects for the next quarter look strong, and the firm is well-positioned to absorb the impact that the loss in orders from China and Italy will generate. As Playtech’s business relies on the growth of the land-based casino sector, it’s fortunes will directly rise and fall with the footfalls on the casino floor. As the seasons change, and the world comes to grips with Covid-19, industry bosses will be seeking a recovery and bounce back from the loss of earnings.

Playtech Strong Growth in 2019

Despite the nervous period currently embroiling Playtech, with share price down 9.5%, the leadership remains positive and reflects back on a tremendous year which saw a 23% rise in annual revenues.

The strong year was bolstered also by an 11% rise in adjusted earnings which takes into consideration the earnings before interest, tax, depreciation and amortization. The Playtech management attributes the strong growth report to the inclusion of a full year of Snaitech results, a subsidiary unit of the Playtech enterprise.

Discussing the promising results over the past 12 months the Chairman of Playtech, Alan Jackson commented:

Our core B2B gambling business reported strong growth in 2019. In addition, we made further strategic progress by entering newly regulated markets, signing new customers, expanding existing relationships and continuing to innovate with new product launches.Alan Jackson, Chairman, Playtech

Together, this combination of factors is laying the foundations for a commanding position in the gambling technology market for Playtech. The B2C side of the business, which is represented by the Snaitech subsidiary, continues to make significant ground and gains with its relative market share. In the online betting and gaming market of Italy, Snaitech now controls the largest portion of the market.

Given this exposure to the Italian economic forces, it is no surprise that the share price of Playtech has been so sensitive to the spread of Coronavirus in Northern Italy. As China represents another huge proportion of Playtech’s business, the future growth progress of the firm will be deeply integrated with the resolvent of the global health emergency that we are facing.

In the previous two weeks, Playtech has seen a material impact in changes in customer behavior in two of its core markets. It seems unlikely that the firm will be able to maintain the previous year’s run-rate into 2020. Bosses at Playtech will eventually be able to justify this slowdown to investors, as the effects of Coronavirus impact Asian gambling and all global industry’s from manufacturing & construction, to food supply and logistics.

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