Party IPO - The Smartest Poker Players in History?

[TheWorstPlayer]

Matt, if they want to get out it's not going to be very easy to sell off a 2BN company and it will also cost a lot. Easier to just sell shares to the public. That way they can keep some ownership share and benefit from future success even if they stop running the company themselves. No?

[B-Man]

[ QUOTE ]
Anyone understand why a very high cash flow business like PartyPoker would IPO? It seems like a lack of sophistication on their part. Why endure the hassles of regulation when your current cash flow exceeds what you would reasonably make off your ownership assets even if you liquidated on Day 1 and invested well.


[/ QUOTE ]

Matt,

The IPO is a no-brainer if they can really do it at a valuation of $10 billion:

1. $10 billion is over 26 times last year's earnings, so they are getting a good price.

2. I think they are selling at the optimum time--the explosive growth of poker can't continue forever, eventually the weaker players lose too much money and quit. Also, if the U.S. bans internet poker, they will lose a huge chunk of their customers in the blink of an eye.

3. Liquidity.

4. Diversification.

[Matt Flynn]

[ QUOTE ]

The IPO is a no-brainer if they can really do it at a valuation of $10 billion:

1. $10 billion is over 26 times last year's earnings, so they are getting a good price.

2. I think they are selling at the optimum time--the explosive growth of poker can't continue forever, eventually the weaker players lose too much money and quit. Also, if the U.S. bans internet poker, they will lose a huge chunk of their customers in the blink of an eye.

3. Liquidity.

4. Diversification.

[/ QUOTE ]

Ok makes sense. Who the heck would buy that though is beyond me. Reminds me of shorting Palm when it IPO'd.

Matt

[TheWorstPlayer]

[ QUOTE ]
[ QUOTE ]

The IPO is a no-brainer if they can really do it at a valuation of $10 billion:

1. $10 billion is over 26 times last year's earnings, so they are getting a good price.

2. I think they are selling at the optimum time--the explosive growth of poker can't continue forever, eventually the weaker players lose too much money and quit. Also, if the U.S. bans internet poker, they will lose a huge chunk of their customers in the blink of an eye.

3. Liquidity.

4. Diversification.

[/ QUOTE ]

Ok makes sense. Who the heck would buy that though is beyond me. Reminds me of shorting Palm when it IPO'd.

Matt

[/ QUOTE ]
And google

[driller]

You do an ipo and put about a billion (admittedly in stock) in your pocket plus retain control of the company and all its earnings. What's not to understand?

[BadBoyBenny]

Matt,

The total valuation will be well more than 12 times their earnings. Also, the founders are keeping 40% shares of the company. They can diversify the other 20% of their assets which is probably a good move because there is a lot of risk in their business.

Edit:

This also allows them to reward their employees with stock options and early access to the shares. My assumption is that this was part of their decision.