JP Morgan downgrades 888 Holdings

Lea Hogg December 1, 2023

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JP Morgan downgrades 888 Holdings

It has been a significant blow for 888 Holdings, one of the leading companies in the online gaming industry, when JP Morgan downgraded the company’s stock, causing a sharp 7.8 percent decline in the share price.

The top-tier investment bank also revised the target price for 888 Holdings to ￡0.97 per share, marking a substantial reduction from its previous recommendation of ￡1.50.

This abrupt adjustment resulted in the company’s share value plummeting nearly 8 percent, dropping from ￡0.748 to ￡0.704 as of the latest update.

Unraveling the downturn

The descent began in mid-September when the company reported a projected 10 percent decrease in revenue for Q3 2023 compared to the previous year. During the last week, 888 Holdings witnessed an alarming 14.8 percent reduction in its share price, signalling a challenging period for the company. The descent began in mid-September when the company reported a projected 10 percent decrease in revenue for Q3 2023 compared to the previous year.

This announcement set the stage for a prolonged decline, creating an atmosphere of uncertainty among investors.

Analyzing the contributing factors

The company attributed this downturn to a combination of factors, including unfavorable sports results for customers, new compliance regulations in dotcom markets, and the reverberations of safer gambling initiatives in the UK. These challenges were substantiated in 888 Holdings’ October Q3 report, providing a comprehensive overview of the obstacles faced during this tumultuous period.

Regulatory obstacles and leadership changes

Adding to the complexity, 888 Holdings has struggled with regulatory setbacks throughout the year.

In January, CEO Itai Pazner’s resignation followed an internal investigation into Anti-Money Laundering (AML) and Know Your Customer (KYC) failures in Middle Eastern VIP accounts.

Subsequently, the Gambling Commission initiated a review of 888’s license in July, prompted by an attempt by investment fund FS Gaming to appoint former GVC Holdings chief Kenny Alexander as CEO. Concerns over an ongoing HMRC investigation into historic bribery allegations in Turkey during Alexander’s tenure at GVC led to a substantial ￡585 million financial settlement.

In the wake of these challenges, former Fortuna CEO Per Widerstr?m (in photo above), assumed the role of CEO at 888 Holdings in October.

The change in leadership aims to steer the company through turbulent waters and restore investor confidence amid a challenging financial landscape. As 888 Holdings navigates this intricate scenario, industry stakeholders closely watch for signs of recovery and strategic initiatives to counteract the recent downturn.

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