In its worst trading day in nearly a decade, shares of online gaming and financial trading systems provider Playtech PLC (LON:PTEC) traded down by more than 22% on Thursday after reporting a surprisingly negative Trading Update for the second half of 2017 earlier in the day.
Playtech shares closed Thursday at £7.68, down 22.2% from Wednesday’s close of £9.86. Thursday’s intraday low of £7.37 was a 52-week low for the stock.
Playtech’s earnings “warning” was actually fairly mild, with the company stating that its performance for the full year will be around 5% below the bottom end of market expectations. Reasons given by Playtech included a recent slowdown in certain parts of Asia, and issues relating to its Sun Bingo contract. However with the company having been on a fairly strong growth streak of late, including the initial contributions of recently acquired institutional FX arm TradeTech Alpha, the market was clearly expecting more.
An interesting note in all this is that Playtech founder and former controlling shareholder Teddy Sagi has sold most of his Playtech stake over the past year, avoiding most of what would have been a nine-figure loss from Thursday’s share price drop. Sagi sold £329 million worth of Playtech shares last November (at £8.50 per share), a further £113 million in March 2017 at £8.72 per share, and most recently another large block of shares in June bringing in £337 million at £9.24 per share.
In all, Teddy Sagi took his stake in Playtech down from 33% late last year to just 6.3% currently. That still left Mr. Sagi with a paper loss of about £34 million from Thursday’s drop, but clearly a lot less than had he still owned 33% of the company. In fairness to Mr. Sagi, his share sales were all done well before it appears that the issues leading to Playtech’s current profit warning occurred. And, he had a good reason to sell his shares, as he is actively diversifying his business interests into other areas including real estate.