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888 Holdings Plc Still Presents A Buy

Mar. 09, 2021 10:53 AM ET888 Holdings plc (EIHDF)DKNG, PBTHF, PENN15 Comments


  • UK-based 888 Holdings Plc is a diverse, online betting company strong in casino, poker and bingo, and growing in sports betting.
  • Among tier two sports betting platforms, it has a strong, upward ramp, gaining market share without betting the farm on customer costs.
  • It is poised for a big move weeks away from its 2020 fiscal year earnings release which could be an upside surprise. Repeat: could be.
  • This idea was discussed in more depth with members of my private investing community, The House Edge. Learn More »

888: online gaming buy hiding in plain sight

We are now guiding long on UK-based 888 Holdings Plc (OTCPK:EIHDF), a global online gaming entrant, ranking 10th largest among peers.

Our opinion grows out of 888's track record between 2017 and 2019. And in general, we think we are at the endgame phase of the pandemic which looms positive overall for gaming. We think 888 has remained cheap while the sector leaders have excessive valuations. That's an entry point IMHO.

Valuations of major entrants for context

For context, we begin with our most recent guidance on the two highest flyers in the sector: Penn National Gaming Inc. (PENN) and DraftKings (DKNG). Both these companies continued solid performances in revenue gains both in existing, but particularly, in newly legalized markets like Michigan. In both cases, my take has been unwavering, even since my original article back last fall on DKNG when the stock traded at $54.94 and early last month and when Penn reached an apogee of $128.

Analysts were gushy and giddy putting PTs of $200 a share and higher on Penn, for example. My guidance was simply this: The companies' sector leadership was warranted. I specifically liked Penn's casino business better, but I was not overly impressed by its good prospects in sports betting through its Barstool app. I liked DKNG's strong cash position and its tightening focus on reducing its losses by better control of its new customer acquisition marketing expense. But in the end, my take is still based on the sense that both stocks were overvalued.

Given the Super Bowl lying just ahead and the current launch of the NCAA FINAL FOUR event, I then recommended two possibilities: If you were sitting long with a fat profit on either one, sell half, or alternatively, just hold and do not

For in-depth and deep dive research on the casino and gaming sector, subscribe to The House Edge. New: Free excerpts from our book in progress "The Smartest ever Guide to Gaming Stocks" - free to existing members and new subscribers.

This article was written by

Howard Jay Klein profile picture

Howard Jay Klein has 30 years of experience as an executive and consultant in major casino operations. His background includes: Ballys, Trump Taj Mahal, Mohegan Sun, and Caesars Palace in Las Vegas. He is a value investor first, using management quality to inform his investment ideas. Howard is the leader of the investing group The House Edge where he shares actionable research for investing in the casino and entertainment industries.

Features of include: actionable analysis on gaming companies, news and interpretation for the latest trends in gaming, a regular newsletter, buy-sell-hold or accumulate recommendations, chat. Learn More.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

All looked great for me until I read their dismal platform reviews. uk.trustpilot.com/...

Maybe this will save someone from a bad investment.
FranCohen profile picture
888 crossed £4 / share today. I would suggest those wanting to buy this ticker not buy the pink sheet (OTC) play (EIHDF) which is not a true ADS nor ADR. Only 8,800 shares traded hands today on the OTC today whereas 888’s actual volume on the LSE today was 1,635,896 shares for a total of £4,919,013.19 Turnover (on book). Source: www.londonstockexchange.com/...
I_LUV_MY_DIVS profile picture
I couldn't easily find any hard numbers on outstanding debt. As they approach the 1Billion $ revenue mark annually the debt picture seems like a number I need to know before buying. Anyone know this info ??
FranCohen profile picture
@I_LUV_MY_DIVS I know the answer to your question but you should do your own DD. It’s not that difficult to find, your answer lies in here: www.londonstockexchange.com/...
I_LUV_MY_DIVS profile picture
@FranCohen Jeeez Fran I'm LAZY LOL ! Used to live and work in Vegas and I've been looking to buy MGM ( worked there but never owned any stock) after some rumors they might buy out an online gambling name. However 888 appears to have more upside so I did initiate a small position with 888 and will buy on dips. Companies with zero debt make me happy. Gracias'

from the link:
The RCF taken by 888 from Barclays Bank plc was repaid in full during 2020, and 888 has no third party debt. In addition, the Company's net cash position improved and business liquidity increased during 2020.
joelo profile picture
Howard, thank you for the heads up on this company, good earnings report out this morning.
Howard Jay Klein profile picture
GYS needs a deep dive before I add my viewpoint. Stay tuned.
@Howard Jay Klein Now GYS surged after possible merge announcement. This moved position score to 'hold'.

I've just followed large insider buying wave and seems it worked out. Probably will sell after dividend, but before merge if it happens, since BALY is much less interesting asset in my view.
What do you think about GYS? Rise was more than 100% last year
FranCohen profile picture
Winner, winner, Ibex Dinner! 300% run up with lots more to go, you don’t say? Welcome to the party!
LVS should purchase this platform.
FranCohen profile picture
@jensan96 Interesting thought, as a member of a VC Fund who participated in 888’s early funding rounds (and currently a large holder) I can tell you these gents no what they have and any sale would be at many multiples of the current price. I wouldn’t “bet” on it happening.
@FranCohen the scenario of purchase of 888 near 1.8-2 Billion GBP by Sands, seem reasonable when combining the purchase of Crown Resorts with the 7 established IR that Sands presently owns, thus amortizing the cost over a short period of time and kick starting the online platform .

Or in the alternative, similar to what the format of Penn Gaming, create a 10 to 20 year contract with 888 to become the online gambling platform with Sands. Sands purchases 35% of 888 for 600 Million GBP.
FranCohen profile picture
@jensan96 I’m not disagreeing with the numbers you’ve provided. However having participated in 888’s seed rounds from Series A forward and our VC Fund helping bring them from private to public whilst currently holding a large % of the float (likely the largest besides the founders) and knowing the 888 team as we do ALL our companies we fund at Ibex Investors a deal is not to be neglected or disregarded. Nevertheless, being LVS’s back of house “white label” I tend to doubt a deal will be made at this level. They’re throwing off plenty of free cash flow, have few employees to pay whist continue growing and have gone from 3 guys in a garage in Israel to where they are today. IMO, The plan has a longer horizon. That’s all I can write w/o betraying any confidences or N.D.’s.
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