Since Paddy Power Betfair (PDYPY) went public in 2000, the online gambling site is up 40-fold. With analysts projecting double-digit growth in both profits & revenue over the the next several years, it would seem as if investors would be bullish on the company. However, a recent 9% drop indicates otherwise. Investors are concerned about CEO Breon Corcoran unexpectedly stepping down, the company’s recent earnings report which reflected disappointing growth numbers within its online division and questions surrounding Britain’s pending review of the gaming industry. While shares are down 30% from their February high, they are currently trading at a 44% premium on enterprise valuation within the sector. For those who see an opportunity, a growing online sports betting business and strong balance sheet support their case for an investment.

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Buy the dip with Paddy Power? A case for not betting on it yet

Howie Long-Short: Corcoran noted during the Q2 earnings call that the PDYPY consumer facing product is “not good enough” and that the “UI is a bit sloppy”. It’s also not an immediate focus for the company, with stack integration consuming 70% of technical resources. For an industry that is moving increasingly online, that must be a cause for concern.

Fan Marino: With college football season just 2 weeks away, I’m going to toss you an early winner. Auburn -34.5 (Caesars) vs. Georgia Southern. Take your antacid and give the 5 TDs.

Author: John Wall Street

At the intersection of sports & finance.

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