Stocks Tracker: White paper fails to bite as prices perk up in April

Entain

3 April closing: 1,259p

28 April closing: 1,440p

Peak April closing: 1,440.50p

A shot of adrenaline in the form of a positive Q1 trading update saw Entain’s share price jump more than 16% in April as the London-listed operator leant on a strong US performance and avoided too many European regulatory headaches.

A slow start to the month may have been somewhat disappointing given the operator parted with $160m to acquire sports media and live scores provider 365scores on Wednesday 5 April, which didn’t pique the market’s interest in shooting the company’s shares upwards. Entain said the brand would unlock “further growth opportunities and support [its] global strategic ambitions”. It is yet to be seen how Entain will leverage 365scores, with the opportunity for convergence via the funnelling of potential depositing customers the most obvious eventual route to head down.

The real spike came on Tuesday 18 April when the firm confirmed an 11% year-on-year (YoY) rise in Q1 2023 net gaming revenue (NGR) on a constant currency (cc) basis. However, on a pro forma basis, online NGR only increased by 1% due to ongoing regulatory headwinds in Germany and the UK.

A stellar performance by its US-facing JV BetMGM saw NGR jump by 76% YoY to around $470m, with the firm set to become EBITDA positive in H2. At the time, CEO Jette Nygaard-Andersen said: “We are delivering both financially and strategically, with a record number of active customers enjoying our products, and we are executing on growth opportunities to further diversify and expand across regulated markets.”

Entain’s share price jumped from a previous close of 1,305.50p to 1,400p on results day, setting the trajectory for the remainder of the month. A continued solid increase was not sullied after its BetCity subsidiary in the Netherlands was hit with a €400,000 fine over advertising to young adults. Entain’s share price closed out the month at 1,440p after opening at 1,259p, ultimately avoiding getting drenched by April showers. And the added bonus of the white paper into the Gambling Act 2005 review not having a material impact will have given the firm a welcome boost, with listed firms avoiding any major backlash from the new proposals put forward by the government.

888

3 April closing: 52.90p

28 April closing: 80p

Peak April closing: 80.50p

April marked a much welcome month for 888 after the operator was able to take a small victory on the stock market. The group’s share price recovered to match that of its initial plummet on 30 January following the departure of CEO Itai Pazner and the revelation of VIP regulatory issues in the Middle East. The last few months have been challenging for the firm, but a positive reaction to its full-year 2022 results and a steady hand of senior leadership seem to have abated some fears. The share price growth in April will make for far happier reading, with 888’s stock soaring by 54% to close out at 80p, compared to 30 January’s 74.85p.

Heading into the month with the looming spectre of William Hill’s record £19.2m settlement with the UK Gambling Commission (UKGC), which had already seen the group’s share price pummelled at the end of March, was a daunting prospect. However, a hugely positive reaction to the group’s performance in 2022 helped steady the ship and send it into lift off.

Group revenue jumped from £712.3m to £1.2bn during 2022, although on a pro forma basis it dipped 3% from £1.9bn to £1.85bn due to baked-in online revenue decreases in the UK and Ireland as a result of enhanced player safety measures.

Adjusted revenue jumped 15% to £310.6m, but pre-tax losses amounted to £115.7m in 2022 compared to a £59m pre-tax profit in 2022.

It was perhaps the update on the search for a permanent CEO, the conclusion of the VIP compliance issues in the Middle East and a commitment to a five-point plan that appeased investors and gave 888 the break. Acting CEO Lord Mendelsohn confirmed an appointment should arrive in the coming months, with the process moving at pace, while he expects to recover between 40% and 50% of revenue from Middle Eastern VIP customers.

A commitment to deleverage the debt accrued as part of the £1.95bn acquisition of William Hill International from a net debt to EBITDA ratio of 5.6x to 3.5x by 2025 was also highlighted. The London-listed firm will be hoping to put Q1 firmly behind it and look to the start of Q2 as a new dawn, rather than a false one.

Kindred Group

3 April closing: SEK111.15

28 April closing: SEK125.80

Peak April closing: SEK126.80

A low-key April was spiked by the announcement from Kindred’s board that it is set to undertake a strategic review of the business which could result in the sale of the company.

Updating the market ahead of the release of its Q1 results, the operator said it was exploring options to maximise shareholder value, with the board unanimously deciding to initiate the review process.

Kindred confirmed options included the whole or partial sale of the company, or a potential merger.

The news sent the firm’s share price soaring in early morning trading, and coupled with a 24.2% YoY rise in revenue for Q1, its stock closed out handsomely on Wednesday 26 April at SEK126.80 compared to a previous close of SEK109.35.

Elsewhere in the group’s results, underlying EBITDA jumped 102% YoY from £24.2m to £49.4m while post-tax profit increased from £6.4m to £25.6m.

The US arm also saw a reduction in its EBITDA losses to £5.5m.

The Stockholm-listed firm had seen little movement in its stock prior to the announcement, with its approval from the New Jersey Division of Gaming Enforcement to launch its proprietary tech platform in the state getting little traction, despite CEO Henrik Tjärnström noting the move would allow the operator to show the “true Unibet product” in New Jersey.