Re: Damn. Up the rakeback
 

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sounds like a lousy investment to me.

7.8BILLION???

despite party bringing in 220million this quarter, i have trouble believing it can continue producing revenue like that for another decade. internet poker is too volatile right now.

thumbs down. short it.

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It's not the revenues that count so much as the operating profit.

An opeating profit of $128m on revenues of $222m is really damn impressive.

FWIW, I did a little back-of-the-envelope valuation making the following assumptions:

- 2005 operating profit is $512m ($128m quarterly operating profit x 4)
- Operating profit grows by 50% in 2006, 25% in 2007, 10% in 2008, and 5% in 2009. After that, operating profit grows at a steady state of 3% per year.
- Discount rate of 15%. This is a high discount rate, but probably warranted given the legal risks and generally unknown nature of the business.

If you do that, you come up with a valuation of $8.7 billion.

Re: Damn. Up the rakeback
 

so you dont forsee party declining any time within the next decade is what youre telling me? their stock is based soley on future projections. the company doesnt have any assets, other than enormous amounts of cash to gain interest on. it also doesnt have much of a way to mutate into another operation once this one goes sour, unless they are planning on releasing several party poker products like chip sets and such.

do you think that it is a good investment, or are merely correcting me when i mention revenue when the important number is profit?

i really dont know too much about the stock market atm, but this stock certainly seems overinflated to me. purchasing overinflated stocks that dont have much room for improvement, while having fierce competitors doesnt seem too great to me. all party is relying on is their current success from past marketing, but there is alot of room for other companies to produce a better product than party, since the rake is so high. in return, party may have to lower the rake some in the future, potentially cutting their profits in half.

Re: Damn. Up the rakeback
 

sort of off-topic, but has there been any news about the US gov't hassling any poker sites after that Paradise business last year? is online poker technically legal/illegal in the US or is it a grey area?

Re: Damn. Up the rakeback
 

Imagine if they named the kid Gaelord.

Gaelord Dikshit.

Re: Damn. Up the rakeback
 

[ QUOTE ]
sort of off-topic, but has there been any news about the US gov't hassling any poker sites after that Paradise business last year? is online poker technically legal/illegal in the US or is it a grey area?

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Its a grey area. The short answer is it looks like there aren't currently any Federal laws that make it illegal nationwide. The question then is whether any state laws against gambling are applicable to internet gaming, and whether laws that specifically forbid online gaming, are enforceable. That's the grey area.



--Zetack

Re: Damn. Up the rakeback
 

I can't comment on whether I think it would be a good or bad investment. But assuming the debt (I'm assuming they have some outstanding debt from advertaising and so forth) is minimal the valuation seems close to me. A p/e ratio of 16-17 is high but not so much for this type of stock that has shown tremendous growth over the last 5 years right? I'm not disagreeing with you though TSB that it may not be a good investment. Just that based on the numbers here the asking price is probably close to where it should be. You're basically gambling on whether the growth of the poker market will continue or not. Investment firms will probably be lining up for this one. They like to dump money into proven stocks close to their peaks after they're publicized in widely read media.

Re: Damn. Up the rakeback
 

[ QUOTE ]
I can't comment on whether I think it would be a good or bad investment. But assuming the debt (I'm assuming they have some outstanding debt from advertaising and so forth) is minimal the valuation seems close to me. A p/e ratio of 16-17 is high but not so much for this type of stock that has shown tremendous growth over the last 5 years right? I'm not disagreeing with you though TSB that it may not be a good investment. Just that based on the numbers here the asking price is probably close to where it should be. You're basically gambling on whether the growth of the poker market will continue or not. Investment firms will probably be lining up for this one. They like to dump money into proven stocks close to their peaks after they're publicized in widely read media.

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It sounds like they are not lining up. There are concerns about the legal status of online poker in the US where 90 percent of party poker's players are.

Not saying they won't eventually take the plunge given the huge growth potential, but it sounds like firms are being surprisingly wary...

--Zetack