This one hit the markets running today. Despite negative publicity it was well supported so I jumped in for a small holding--anyone else joining in?? I am hoping for a good run up before the shorters get going.

Don't catch a falling knife. Ditch those shares while you can.

How amazingly insightful Fundamentalist's post of June 2005 proved to be which I reproduce below - it could have been written today if we didn't know better:

"moneyplus

my thoughts fwiw

there may be some short term upside but to me for the longer term the risks far outweigh the potential reward

I am someone who plays poker online regularly and can see why party is a popular site. However, there is large potential downside in the future based on US govt policy as to whether online gambling is legal - currently it is deemed to be illegal but not policed. Party receive 87% of their revenues from US citizens - if this avenue of revenue and profit is lost then the company will be but a shadow of its current self. To me there are two possible ways this can go long term:

1) The US govt crackdown on their citizens gambling on-line - they have already started by putting pressure on the likes of paypal who do not allow money tfrs to gambling sites. They are also rumoured to be starting to put the pressure onto the banks and credit card companies.

2) The US govt decide to legalise online gambling. If this were to happen then the competition to party will increase overnight with several very big players, especially the casinos who would be likely to bring out their own sites. They would have the ability to link the games to real live games in the casino and offer "comps" to the online players like they do the "live" players. If this were to happen then party could well get squeezed out of the market completely. Ultimately the barriers to entry for competitors are low - the value is the brand name and its customers -the software can effectively be bought off the shelf now.

Based on this, party will only be successful while the US govt continue to dither in either enforcing or changing their policy in this area. Until then, they are likely to generate substantial amounts of cash.


My other concern is to why they have floated - the cash was not needed to help grow the business, it is just to enable the founders to take some money out of the business - would they be doing this if they thought the companys prospects were going to get better?

Long term i think this is a share i would be happy to short but am currently on the sidelines until the price has settled down and found a trading range - i wouldnt be surprised to see it rise over the coming weeks but personally dont see it being a ftse100 company in a few years time.

Fundamentalist.

janetbennison....hope your ok....guaranteed stop loss??

did not have a stop loss

friday prty closed at 1.07 this morning the opened at .40. If I had left say a stop loss at .90p would this have still worked even though they opened at .40p. I have never really understood how the system works. I have taken a real battering today on this one. I will haave to sit on these long tern now this has happened. Good luck to all of you.

Janet

sorry to hear of your loss

with regard to stop losses, if you had a normal stop loss then no it wouldnt have helped you as the price "gapped" past your stop. However, you are able to take a guaranteed stop out (you pay a little extra on the spread for this) and this would have exited you at whatever price you set it at

With regard to sitting on these long term, i would recommend revisiting the fundamentals and working out whether in light of the last few days whether they are good value at their current price. If not then i would look to sell and put your funds into a stock with a better outlook

JB .... as Fundy says unless it was guaranteed, then no, it would have made no difference as price was dumped to 40p at the opening and you would have been closed out at that price .... you will need to talk to your broker about guaranteed stops as just possible not available on all if the stock is considered too volatile or similar or only at a significant premium

80,000 is a very big position in my oppinion, I hope Janet, you didn't put all your eggs in one basket or do it through CFD. Given the P/E for the share is already very high on its own, close to 20 if I remember correctly and considering 80% to 90% of Party's revenue is generated from US market, I felt that it still have some more downtrend to follow. I would quickly close my position if I were you.

Here is how I value this share. (80% plunge in EPS), revised EPS = 20% x 6p = 1.2p.
P/E was previous 18, that is significantly higher than the FTSE average of 13. I doubt people would still be willing to pay for such a high P/E after knowing all these bad news. Say they will pay the industry average of 13, that would value the share at 16p or thereabout. Given whatever the price is now, 45p say. There is still quite a distant to fall.

Anyway, you can also bet the board will significantly expand the European market to counterweight the exposure to the US market and things could get brighter in a few years time, who knows?

Think the EPS could well be worse than that if they have to close all US accounts as they will have a much higher proportion of fixed costs in relation to the remaining turnover and gross profit (i say gross profit because im not convinced they will have a net profit). It will also put a lot of pressure on the balance sheet and gearing of the company.

I also wonder what short term effect is on cash flow position if all US players need the cash they have in their online accounts returned (hopefully this is ringfenced but i cant find anything that confirms this)

I have not thought of the cash flow problem, thanks for enlighting me. Oh well, I think it is just as bad a day for the board as it is for the investors.

They will probably be kicked out of FTSE100 the next time round much like Corus and other shares did. But Corus is doing brilliantly in FTSE250. Perhaps maybe when Party being demoted to FTSE250 only will I start considering buying it again.

Ms Bennison you have very deep pockets! Given your ownership of VOG,IOT,GOO,PRTY and the like I'm surprised you're still solvent. Do you trade on margin or just regular holdings?

Hey Janet - chin up gal - said one gal to another.
You're not the only one who's stuck still holding these, I'm another one and I am sure there are a lot more - there certainly were a lot admitting they were buying in when things were good! This one was always a big gamble, I've done well with it in the past but always knew it could be a disaster, it was a risk taken, profited from and now..well it's a case of wait and see. I certainly wont dump at this price but that's just IMHO, it's made up a few pence today - so far - we shall have to see.
:>)

stock* and JB .... far from convinced that continuing to hold is correct ...... i thought the market might deem the fall overdone this morning, but the recovery has not continued

Agreed Cynic but I'm not bailing right now, decision made rightly or wrongly.
That's not to say I wont bail out tomorrow, next day or next week but just not today.

Fundamentalist,

Re your post #140: I appreciate the sentiment behind your suggestion, but are you not somewhat spitting in the wind by telling JB to look at the fundamentals?

My point being that the red "no bathing" flags have been flying for weeks when it came to online gambling stocks and if they weren't a significant indication as to what might happen to the fundamentals, then I don't know what was.

JB, one sentence confirmed it all: "I have never really understood how the system works."

I really hope you can afford your losses; if you still feel inclined to invest, then perhaps you might be persuaded not to let the size of your investment outstrip your knowledge of the subject.

I am truly sorry that so many people have lost out this morning, but the warning signs were there.

Yours in something of a state of shock and awe.

Soul Traders.

ST

only trying to help in answer to a question

Fundy, I appreciate that, and didn't mean to cause anyone any offence. I apologise if offence was felt. You're right in what you say.

who needs friggin America...shareprice has fallen to this over emphasis on yankeeland...hundreds more countries to be in...the growth story has just begun

more maesto supreme rubbish ..... what's this guy on? .... methane overdose?

President Bush is costing me a bomb!