888.com Shares Begin Trading with a Fizzle

This was not how it was supposed to start.

With the explosive IPO’s of online gaming competitors PartyGaming and Empire Online, to name a couple, 888.com expected that its debut on the London Stock Exchange would be a resounding success. But for the operator of popular poker room Pacific Poker, as well as online casinos Reef Club and Casino-on-Net saw its shares actually dip 5 pence to 162.7 pence in afternoon trading Thursday.

If 888.com had gone public a few weeks ago, the story might have been different. But PartyGaming recently warned investors that while it expects continued revenue and profit growth, that growth will not likely be as fast as it has been. This caused the firm to lose a third of its valuation in one day and, in turn, cool off the rest of the online gaming sector.

David Buik of Cantor Index did have positive things to say about 888.com, despite the lackadaisical first day.

888.com is a “well-run company,” he said. "They haven't been too ambitious on the [flotation] price, which is a good sign."

He could not say for sure if the online gaming mania has seen its best days because there just is not enough historical data to come up with a definitive answer.

Just like PartyGaming, 888.com does not expect its poker revenues to climb at the same rate they have been, as revenues shot up 226% in the first half of 2005 versus one year ago. Net gaming revenue from its casinos was up 14.2%

Shares were available only to institutional investors Thursday, with full trading beginning Monday.

Originally published September 29, 2005