So far, 2022 has been a very turbulent year for investors. Stocks have been all over the place in every market, thanks to the Russian war, cost of living crisis and multiple other issues all hitting at once. Real-world events always have a big effect on the price of stocks, particularly in the realm of iGaming.
Across the board, iGaming stocks have been tumbling for the last year. Some have done better than others, but everyone is in the red at the moment. Flutter entertainment – the company behind big-name brands like Paddy Power – have seen their share price drop by 45% over the last year to date. In the last month alone it’s dropped 28%, and this isn’t unusual. Entain, the company behind Ladbrokes and other household names, have fared a lot better, but even their stocks are down.
The Stock Exchange in General
First of all, the stock market as a whole has been performing incredibly poorly at the moment. Shares have dropped massively, as has the cryptocurrency market. It’s not unusual for shares to drop over Winter – it’s a fairly predictable cycle – but this has been one of the worst Winters for quite a while. Why? One of the biggest reasons is how uncertain the world is at the moment. Between the cost of living crisis that’s affecting multiple countries around the world and Russia’s invasion of Ukraine, investors are understandably a little more jumpy than usual and are reluctant to invest.
The share price for most big-name iGaming firms is abysmal at the moment so it’s not a good way to predict how iGaming companies might perform over the coming months. A better way to determine this is to look at company news, their quarterly reports and predictions for the rest of the financial year.
What Industries Have Been Affected?
When it comes to stocks and shares it certainly isn’t only the iGaming and betting industries that have been affected. Estate Agents Purplebricks saw their lowest ever value recently and even fuel and gas companies have seen their share of dramatic drops in value. When you consider everything that is going on in the world, the increase in living costs and the underlying uncertainty around Coronavirus it really isn’t much of a surprise that the world of finances has been affected.
The iGaming Industry
One of the companies that doesn’t look great when you dig into their news and financial history at the moment is Bet365. The latest news surrounding the company is that Bet365 Chief Denise Coats has had to take a pay cut of almost a third – she’s still earning £230million per year, but it’s a far cry from the £421million that she was earning. The company blamed a slump in profits as a result of the pandemic for the need to take a pay cut. However, this slump is likely to continue as people have less disposable income thanks to the rise in household bills and the price of goods increasing.
Bet365 isn’t the only company to be struggling with a slump in income. Entain, the owner of Ladbrokes and other large scale iGaming companies, issued updated guidance for its revenue forecast after revenue in the final quarter of 2021 saw a steep decline. Revenue fell by 9% in the fourth quarter. Entain reduced their expected annual core earnings estimate from £850m-£900m down to £875-£885million.
The Future of the Online Betting Industry
Without a doubt, it is diversification that is needed. In fact, it is companies being diverse that have saved many of them over the last 24 months. Lockdowns saw online and mobile alternatives soar, and whilst many restrictions globally are lifted operators will still be keen to provide services on as many devices as possible, for example a pay by phone casino. The online betting industry isn’t going anywhere anytime soon, but if they want stocks and shares to be successful then a diverse portfolio of customer offerings is a must. We might not have any restrictions related to Coronavirus in the UK currently but there are many people still worried about winter and what effect this might have on things and as such could well be holding back on investing. By showing that the iGaming industry can adapt and keep up with ever-changing customer demand they prove that they are an industry that is set to stick around, and this will give investors and customers confidence in their products.
2022 and The iGaming Industry So far
In all honesty 2022 isn’t shaping up to be a good year for any iGaming company. Ladbrokes is expecting a drop in revenue after already seeing a large slump in the previous quarter. Bet365 has just pulled out of Russia and will be feeling the pain of the revenue that’s missing from that. Flutter is also expecting to see a drop in revenue, and have also blamed the pandemic for their skimmed revenue forecast for this year.
A lot of businesses will still be feeling the strain of the pandemic, with so many people struggling for money and lacking disposable income that they would usually use to play online casino games. Lots of people lost their businesses or lost their jobs and got into debt during the pandemic.
The crisis in Ukraine is having a huge effect on families and is very much restricting budgets, leaving no room for leisure spending. Gas and electricity are costing a lot more due to reduced supply and increased demand. In addition to this, Russia is one of the biggest exporters in the world for wheat. Between Russian wheat and oil no longer being imported into the UK, and the supply chains being interrupted by the war the price of basic essentials is continuously rising. With all of this in mind, it’s going to be a very difficult year for the iGaming industry – they’ll need to work hard to stick it out, but with diverse products, they are much more likely to be able to succeed – as the last couple of years has shown.
