Shares in the world\’s largest online casino jumped 5 per cent in early trade, before falling 12 per cent to 162 pence and recover slightly to close at 170 pence, giving the company a market value of around 575 million pounds.
The company priced its initial public offering at the low end of the indicated price range (175 pence a share), amid concerns of slowing internet gaming growth after a warning from rival PartyGaming.
Despite a loss of confidence in the sector, 888 Chief Executive, John Anderson, said they have been delighted to have attracted “such strong support among leading UK and European institutional investors.”
Anderson also said he was hopeful investor confidence would return in online gambling stocks and that other firms were suffering due to a lack of understanding of the different business models.
“The market sentiment will turn around, because the issues that caused PartyGaming\’s share price to drop were company specific.”
“There are several business models that are all different and you can’t just lump them together and compare them.”
“I think the City should, and I hope it would, place increasing importance on the quality of management in this sector. Our management team have been pioneers in this industry, and you can’t buy that experience.”
“The two most important things in this industry are brands and management, and if you get those two right everything else will follow.”
Anderson added that a benchmarking system would help alleviate some of the concerns currently in the market.
“That is what institutions need to understand where we all are and how the sector is performing as a whole. A benchmarking system is the last block to institutional acceptance, and I am working hard to get a system put into place.”
Justin Urquhart Stewart, analyst at Seven Investment Management, said there was now a “dose of realism” following the hype surrounding the floatation of PartyGaming.
David Buik, of Cantor Index, said it was too early to say if the online gambling bubble had burst, but remarked that 888 was a “well-run company.”
“They haven\’t been too ambitious on the [floatation] price, which is a good sign,” he said.
Unconditional dealings are expected to start on October 4.
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