Shares in Entain, the owner of Ladbrokes, experienced a 13% decline as the company warned of a slowdown in sales and diminishing takeover speculation. Entain, based in London, reported a decrease in online revenue since the summer, attributing it to adverse sports results, safer gambling measures, and slower growth in Australia and Italy. This decline, which caused a temporary trading halt due to volatility, resulted in the stock being approximately 60% below its record high achieved in 2021, when digital gambling saw a surge during Covid-19 lockdowns.
In addition to the sales slump, the cooling of buyout speculation has also impacted Entain’s shares. Analysts previously highlighted the potential for a second bid from joint venture partner MGM Resorts International, but this speculation has subsided in recent weeks. Jefferies analyst James Wheatcroft stated in a research note that there is a decrease in confidence regarding a further approach from MGM. Wheatcroft also mentioned that Entain’s trading update suggests a potential reduction in consensus earnings expectations by up to 5%.
Other companies in the gambling industry were also affected by Entain’s decline. Rivals Flutter Entertainment, the owner of Paddy Power, and 888 Holdings, the parent company of William Hill, experienced a drop of 3.3% and 7% respectively. French lottery operator La Francaise des Jeux also witnessed a decline in its shares.
Entain owns online brands such as Bwin and Partypoker. The company anticipates a decrease in third-quarter online net gaming revenue by a “high single-digit percent” on a pro-forma basis. It also expects group online revenue for the full year to decrease by a “low single-digit percent.” This is a departure from its earlier forecast of annual growth in the low to mid-single digits.
Overall, the warning of a sales slowdown and the fading takeover speculation have significantly impacted Entain’s shares. The company’s performance in the coming months will be closely watched as it navigates through the challenges it currently faces.