the analysts start to attack Betfair valuation

There was an article yesterday behind the FT paywall attacking the valuation of Betfair and its growth prospects. This essentially echoed my thoughts in various posts here and discussions with a couple of investment firms. I don't see the price crashing, but I do think that growth prospects are limited in the short-term. Their big upshot will be if one of the biggest nations in the world opens up, such as China, India or the US. Don't hold your breath though, that might take a while.

Betfair reply to analyst’s unfavourable share forecast

After picking up three awards at the eGR Awards on Wednesday night, narrowly missing out on the Operator of the Year award, it’s neigh-on definite that attending on behalf Betfair will have left you quite the hangover to deal with. This will have been made significantly worse by a news item published on FT.com yesterday morning – something that isn’t curable by a Bloody Mary.

After the founders floated it last month, Betfair’s stock was put on the market for £13-a-share and the company valued at around £1.3bn. It hasn’t impressed certain market professionals, which led Investec analyst Paul Leyland to comment: “Betfair is approaching maturity in the UK, faces significant regulatory threats elsewhere, and will gain little traction in financials.

“Betfair needs a liberal tax and regulatory approach to online gambling in order to operate, let alone to thrive. We see this as increasingly unlikely in any major market.”

Betfair, of course, refuted the argument but he makes perfect sense in my opinion....Posted byScott Fergusonat15:23

Betfair float valuation going low

Rival bookmaker Bodog don't mind a bit of innovative publicity, such as being first to price up who killed Archie Mitchell in EastEnders, which was then copied by several other firms. This time they have gone up with markets on the Betfair IPO valuation and the market moves are telling a story.

Initially, under £1.4bn (remember, the figure quoted in most of the press was £1.5bn, which was their valuation in 2005 when Softbank purchased 23% of the company) was priced at 8/11 with over that figure available at evens. But money has come strongly for the under, forcing it down to 1/2, then 1/3.

A Bodog spokesman said: “We have had 182 bets on the downside compared to just 22 on the upside. For a bet this niche this is quite a lot. Having a lot of experience in this industry I’m pretty certain these people will turn out to be right.

“We even had people setting up multiple accounts so they could get three bets at the maximum of £500 a bet.”

Sounds like a few ex-staff starting to hedge as their dreams of buying Ferraris are being downgraded to just a nice Jag...Posted byScott Fergusonat08:32