Getting crushed....

Don't really see why, Q4FY2011 was good... and Q1FY2012 has actaully started very well. (but markets might be irrational longer than I can stay Liquid LOL)

........................

I thought the same on first reading fwiw. but accounts and attached blurb will always look good on first reading, by design, as it's partly investor PR.  It's when you delve deeper into the figures that you get a better appreciation of what's going on.  Looking at the positives it's good to see the brokers and markets have given the thumbs down to their latest venture.

Magic. It's 2011 dude!

Bayes , Betfair's yearly reprts are baesed on 12 month periods from May to April, hence the FY 2011.

Shows what a clown I am!

I agree with racingguru the price needs to get to a realistiuc level before it bottoms out.I think 4.50 or lower too.
The stock market drop and world market slow down and also the big worry today of european debt contagian
doenst at all help the share.A big worry more countries in europe will shut the door on betting exchanges
at a time people are spending less and taking the time to pay off their credit /debit card debts etc.

racingguru
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Its getting down to a ore realistic level but think it may go at 4.50 or so before it bottoms out.

BF was sold on a completely unrealistic multiple so most of this drop is just a natural correction as people have woken up to the fact that BF isn't gonna conquer the world.


The reason the multiple is dropping is that Betfair is becoming a traditional bookmaker (p/e 12 like Willhill) and moving a way from being a betting exchange (p/e 34).

They're killing their own growth by disincentivising their most profitable customers to invest in long term solutions to profit from the exchange. It's more a case of make as much money as possible, as quickly as possible before the game's up.

Unless Betfair reverse the decision to develop their bookmaking business at the expense of their betting exchange business, things won't end well.

If Betfair thinks they can get rid of winners and seed the whole exchange themselves, they might as well go ahead and try boiling the ocean. They can be a low cost operator: betting exchange, or a relatively high margin operator: traditional bookie. If they try to combine the two (currently they exist separately), another company will inevitably take over as the world's largest betting exchange.

"On balance, I reckon these shares are a bad bet.

Will Betfair find the going any better this week? Unikely.

So far, July has not treated the betting exchange kindly.

But then, neither did June or May.

This morning shares fell 4% after closing down nearly 6% on Friday, taking them to just 654.5p.
When Goldman Sachs and Morgan Stanley floated it last October, they persuaded investors it was worth… ahem, 1300p. Well done, lads: big fee well earned.

So what's going on? As anyone who's considered taking a flutter on online gambling stocks will tell you, there's a massive risk involved in their operations overseas, where many countries still take a dim view of online gambling.

Fines and trading bans have a nasty habit of appearing out of the blue from governments launching electioneering clampdowns. What's more, there are fewer gamblers these days and Britons don't have the money to spend dabbling around on the horses.

But investors are also getting wise to more of a Betfair-specific problem. There's a growing suspicion among analysts that the company is being a tad too aggressive with its accounting practices.

Betfair is having to invest in developing its IT to run faster, better services. The question is, does this spending always show through clearly in its profit figures? Betfair put up to £25 million of its IT development costs last year on its balance sheet instead of taking it out of its profit figures as a more conservative company might.

A nice chap from Betfair explains this simply gives a better picture of the underlying way the business is performing during a three-year heavy investment period, smoothing out the costs.

But some investors are still unnerved and troubled about the implications for Betfair's value.

You see, if you put that £25 million through the profit and loss account underlying profits come out about 30% lower. To make things more scary, that £25 million expensed cost is about £10 million up on the previous year - one hell of an acceleration in the wrong direction.

As one investor told me this morning, if you see Betfair as, say, an IG Index for wannabe turf accountants, you can understand the concern. IG's shares today value it at 12.5 times its expected profits for 2012. Betfair is valued at 18.5 times. Sounding toppy? That's nothing. Put Betfair's IT development cost through the P&L and the share price is a thumping multiple of 24 times. That seems like the kind of mispriced bet that would see you getting crucified by Betfair's famously sharp customers.

Chief executive David Yu recently announced he was off. Shareholders should follow."

http://www.thisislondon.co.uk/markets/article-23968817-murdoch-could-reach-for-sky-with-uk-papers-sell-off.do

None of the other parts of the business would stand a snowballs chance in hell of being succesful as stand alone products, they just cling on like parasites using the Betfair brand to garnish what profit they can, but in doing so they damage the core product and the brand.

Trading is the future feck [;)]

It's also so too unFeck like.

TheInvestor2

The reason the multiple is dropping is that Betfair is becoming a traditional bookmaker (p/e 12 like Willhill) and moving a way from being a betting exchange (p/e 34).

They're killing their own growth by disincentivising their most profitable customers to invest in long term solutions to profit from the exchange. It's more a case of make as much money as possible, as quickly as possible before the game's up.

Unless Betfair reverse the decision to develop their bookmaking business at the expense of their betting exchange business, things won't end well.

If Betfair thinks they can get rid of winners and seed the whole exchange themselves, they might as well go ahead and try boiling the ocean. They can be a low cost operator: betting exchange, or a relatively high margin operator: traditional bookie. If they try to combine the two (currently they exist separately), another company will inevitably take over as the world's largest betting exchange.


one of the best posts on here for a long time. spot on.

well said...

Investor, why do you think they couldn't seed the markets themselves?

Investor, why do you think they couldn't seed the markets themselves?

catfleppo vs the betfair bot?

catfleppo
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Investor, why do you think they couldn't seed the markets themselves?

I'd say they can under certain circumstances, but in any case it would create a conflict of interests. If they tried to seed the whole thing, offering prices like a traditional bookie with the addition of being able to lay, they would get killed. Unless they widened they spread significantly. In that case they would simply have stopped being an exchange.

After going from 'winners welcome' to 'winners tolerated', many are concerned that this shift in Betfair's policy is a continuing trend.

Betfair will get killed if they seed/participate in their own exchange markets.... even with the advantages of cross matching and clock beating. this will not be enough to protect them from wider participation.

if the separately lay selected customers, and arb back to exchange - they could make some money.


Last5Minutes - is so true, but there is a very good reason for that

Betfair have the advantage of stacks of api usage data that they can use to see how people like me have been placing bets.  True they can't see my algorithm but they could do a reasonable job of reverse engineering I reckon.  The downside would be a loss of the p2p concept but they seem to be inching in that direction anyway.

Betfair is good company Lori.  They are better than other company and will make betting work good.

ffs..WE all work for Betfair.