Betfair - The Next Chapter

OK, here we go….. (Warning Long Post)

Well, Betfair released their Q1 update today. I had a quick look this morning and to be honest was quite stunned with some of the numbers. There is something not quite right with this Company (Broken record I know!) and I am determined to get to the bottom of it. Felt I had to listen to the Conference Call before posting, which I have now done.

Please bear in mind this is a FTSE 250 Company, as in they are in the Largest 350 Quoted companies in the UK. I’m not sure how, hence the Post.

I originally questioned the Flotation Value here. Not long before I was banned actually but that is another story.

Since then they have destroyed circa 50% of any Shareholder Value, but again I guess some of these Investment Houses live and learn eh? At least they are now paying a Dividend (Derisory as it may be!) and Buying back £50 Million of Shares – Are they mad?

Let’s look at some facts and figures from the results and the conference call…………….

Betfair Sports Book (Bookmaker) is due to launch in Q4 this FY. Apparently misquoted, Mr Morana suggests this may equate to 30% of their revenues going forward. Are you kidding? Ladbrokes you are not, but even if you were they trade on a P/E of 14 and you on 30 – How do you justify your current rating and Share price? and if you can’t why are you buying back the fecking Shares? I repeat from previous posts there is no growth now in the Exchange story. In fact with the new PC they have managed to spawn a competitor which was never a threat before – Betdaq.

The ARPU has apparently increased due to their focus on High Value Customers and retaining them. They are achieving this by advertising on the Female Beach Volleyball team’s arses and Lee Fecking Dixon – Are you sure? Betfair Ambassadors – Who are you trying to kid?

According to Mr Morana the Q2 and Q3 comparisons should be easy going forward, but Q4 will be the toughest? Why? Is it because by then you’ll have to come clean about your escalating costs? And your completed IT Infrastructure upgrade that no-one has felt the benefit of? Apparently 20% of Customers use the new ‘Cash Out’ facility in-play which rips them off………..  But it is OK they are now doing education for us mug punters.

From a regulatory perspective they are not looking good. Italians already have no access to Poker and Games, they can bet Sports Book via www.betfair.it but that is it. They are paying a Tax on their GP in Spain from July. Germany and Greece are going the same way. If the UK follows suit – where does that leave them?

Oh Yes the US………. No Bloody chance. In California it was acknowledged in the Conference Call there are multiple licences available. Everyone is going to step back to allow that little UK Company to dominate? No I don’t think so either. Don’t even get me started on New Jersey.

On to Poker and they are pleased with their relationship with Ongame. Why? Apparently they are one of the main liquidity providers to the platform. Great. How comes they can’t sort out data feeds for Leaderboards which have alienated so many and constantly use Ongame as an excuse for not being able to provide feedback? BWIN.Party will have no interest in the Betfair story going forward that is for sure which could lead to Betfair purchasing Ongame (Morana wouldn’t comment) – If they do the Poker story is finished. Shit platform minus the traffic does not make a success.

Games – Declining, but apparently everyone who played the World Cup played their Casino, so even though they have been ‘rogued’ more or less everywhere this has nothing to do with it.

LMAX – Oh Please, it a fecking Black Hole and they know it. Shoots of revival apparently!. Stock Market speak.

On to the Exchange (Core Betfair) figures themselves and apparently they are showing growth Quarter over Quarter in more or less everything except Football (Due to the World Cup in Q1 last Year).  Are you sure? Golf looks dead now and apparently the rest is no better.

I am convinced there is Seeding going on, which may indicate why the ‘Risk Sports’ figure has fallen off a cliff.

Not sure if they are involved in the increased delays on ATR and Live Video to please some of their ‘High PC paying in running at the Track Punters’  but you wouldn’t discount it would you?

The whole operation appears to me to have gone from ‘Innovation’ to ‘Desperation’ and for that reason if the Share Price goes near £7 again I am going ‘Short’.

The only thing that has grown from this time last Year is the profit they make from management of Customer Funds. Safe? Well I thought Full Tilt was safe.

Last Point before I go. If you lose money through Online Banking you get refunded. If your Betfair Account is hacked it is your responsibility. Why do people keep serious money on this site? Especially after the DNS hack over the weekend? Are you fecking mad? There must be a reason they won’t go HTTPS or indeed introduce another level of Security. Infrastructure Investment in all the wrong places I would suggest.

Enough rambling from me. Apologies for the poor structure, but after 2 Hours of writing I can’t be bothered to change it around.

I’d love to hear your thoughts………….. Am I Nutter? Are they the next BP?