Stocks Tracker: Awkward April strikes as Q1 2022 results quell operator opulence

888

1 April closing: 194.20p

29 April closing: 190.60p

Peak April closing: 224.20p

Early April saw 888 tap into the classics. “Do you want the good news first, or the bad news?”. Good, good, good came the eager reply from the masses. And the FTSE 250 firm duly obliged, the bad news sneakily buried but still to be unearthed.

On Thursday 7 April, 888 confirmed it had negotiated a £250m reduction in the £2.2bn it will pay Caesars Entertainment to acquire William Hill’s non-US assets, in a significant coup for the company.

The new deal will see a reduction in the cash consideration element from a price of £834.9m to just £584.9m, which is a fall of almost 30%, to reflect a change in the “macroeconomic and regulatory environment since the announcement of the acquisition” in September 2021.

The market rejoiced, with 888’s share price leaping from its previous close of 192p to a monthly high of 224.20p. Then the bad news had to come, as dawn follows night

In the same announcement confirming the price drop, 888 confirmed William Hill had segregated £15m to pay any potential fine meted out by the UK Gambling Commission (UKGC) fine. If the £15m were to be handed out, it would be the largest ever by the UKGC.

888’s share price fell from its previous lofty height to 210p on Friday 8 April but did retain some solidity heading into results week, which would deal yet another blow to the group’s stock.

A Q1 2022 revenue slump of 18% year-on-year (YoY) to $224m, largely owed to a major 42% YoY drop in the firm’s B2C operations, sent 888’s share price dipping to 196.30p on Wednesday 20 April from a previous close of 204p.

The post-results slump, which became a repeated pattern among operators throughout April, held 888 in its grasp, petering out the stock well below its early April price.

Entain

1 April closing: 1,652p

29 April closing: 1,518.50p

Peak April closing: 1,688.50p

A victim of its previous success, perhaps? The levelling out after an outstanding period of consistent online growth? Either way, Entain’s share price took a hammering as its Q1 2022 results revealed online net gaming revenue (NGR) had dipped 8% YoY.

The month had started positively, with Monday 4 April bringing a monthly high of 1,688.50p but the looming spectre of Thursday 7 April, and the firm’s latest financials was waiting to dash any early April joy.

The London-listed firm saw its share price fall to 1,555p from its previous close of 1,621.50p as the market reacted dramatically. Despite the return of retail revenue, coupled with the impressive stature of Entain’s US-facing JV BetMGM, the share price did not reflect the silver linings away from the headline figure.

CEO Jette Nygaard-Andersen remained undeterred, telling investors: “We have started the year with a good performance across all areas of our business, driven as ever by the strength of our industry-leading platform.

“We have delivered strong performances in all of our major markets, and I am pleased to report that retail is performing well with customers returning for our instore experience,” she added.

However, her William Wallace call wasn’t heard. Entain’s share price continued to drop post-results, bottoming out at a low of 1,524p on Wednesday 13 April. Or so the firm would have hoped. Shoots of growth came the following week, before being scythed down in the week following Easter, ending at a true monthly low of 1,465.50p towards the end of the month.

Kindred Group

1 April closing: SEK104.50

29 April closing: SEK87.08

Peak April closing: SEK107.10

Vertical drops can sometimes be an enjoyable experience that one might remember for an age. Their first rollercoaster, a golf ball trickling before tumbling 90 degrees into the hole after breezing a par three, both potentially unforgettable moments. Kindred Group will want to ensure its latest experience with a vertical drop is utterly forgettable and that a mass case of amnesia strikes the market.

Forecasting its upcoming Q1 2022 results on Friday 8 April, the Stockholm-listed operator confirmed it was expecting to face a YoY revenue decrease of 30% and a drop in EBITDA by 76.4%, mainly due to the firm’s absence from the Netherlands.

The market, shocked, sent the company’s share price tumbling from a previous close of SEK105.25 to SEK91.10 following the ominous announcement.

The pre-announcement could be seen as stroke of damage limitation genius. Although Kindred’s share price failed to return from whence it came, in fact dipping even further in the build up to a detailed Q1 2022 report, when the day came the worse had already happened.

On Thursday 28 April, the firm confirmed its revenue had fallen from £352.6m in Q1 2021 to £246.7m in Q1 2022 while EBITDA declined from £106m in Q1 2021 to £24.5m in Q1 2022.

CEO Henrik Tjärnström tried to ease any fears, confirming the operator planned to make its return to the Dutch market in the near future, while also reaffirming his commitment to breaking the US, despite what he called the “unsustainable marketing and customer incentives” existing in the market.

Super Group

1 April closing: $10.61

29 April closing: $9.58

Peak April closing: $11.05

Super Group’s early stages as a publicly listed company hasn’t seen the Betway and Spin parent company set the market alight with a roaring share price but instead a steady incremental rise since its first full month in February.

In fact, April marked the highest the group’s share price had risen since its debut on the Nasdaq, coinciding with an impressive 45% rise in full-year revenue for 2021 to €1.32bn.

Having started the month above the $10 a share mark, a pre-results announcement dip commenced a week before, falling to $9.43 on Thursday 7 April.

The following week arrived, and with it a steep upward curve for the firm. A recovered price of $10.06 closed out the market on Tuesday 12 April, before the FY21 announcement on Wednesday 13 April sent the company’s share price to a high of $11.05.

The financials also revealed a jump of 46% in adjusted EBITDA to €315m, while profit came in at €235.9m – up 58% from €149.2m in 2020.

However, Betway made up just 11% of the group’s revenue in 2021 at €149.1m with its gaming division taking up the lion’s share.

The initial excitement on the market held on Thursday 14 April, with Super Group’s stock closing at $10.99, before suffering a post-Easter dip, reopening on Tuesday 19 April at $9.95.

The remainder of the month saw the group’s share price continue to dip before a seemingly promising recovery, back over the $10 a share threshold.

However, it was a short-lived promise, with Super Group closing out the month at $9.58 a share on Friday 29 April.