PartyGaming shares plummeted 33.01 percent on Tuesday to 105p a share, well below it's 117p IPO price, and capping 2 billion pounds of it's market value. The nose-dive was triggered by a cautionary note from CEO Richard Segal made during his presentation of Party's half-year results, hinting at a slowdown in the online poker boom.
Segal said specifically: "As expected, whilst the online gaming market and poker in particular continue to show strong year-on-year growth, the rate of growth is continuing to moderate." Despite sign-ups and active players more than doubling at PartyGaming in the last half year, the daily per player value declined with 7 percent from $19.20 to $17.80.
This was apparently more than investors could take, and the PartyGaming stock price started it's dramatic downturn immediately amongst heavy trading. Other gaming stocks like SportingBet and Empire Online soon followed, though they did not decline as sharp as their bigger cousin.
Surprisingly, the actual results that were presented by PartyGaming were quite good. Compared to the same period last year, half year profit rose 25 percent and net income showed a similar increase.
PartyGaming plans to tackle the player value problem by focusing more on customer retention, and by expanding more aggressively into international markets. The company currently has a 80 percent US customer base, and this is considered a high risk by analysts due to the uncertain legal status of online gaming in the US.