Watching online poker stocks for companies like Flutter Entertainment and GVC since Pfizer announced its vaccine, shows just how much investors are looking at COVID headlines rather than data when it comes to 2020’s “poker boom”.
Though COVID has been less than ideal for poker players as biological individuals, it should surprise no one that COVID has been good for online poker as an economic entity.
Closing brick and mortars and playing outside-is-lava has driven most of us into doing everything virtually. Shopping, working, and socializing — why not playing poker too?
That said, the coverage of the 2020 poker boom has greatly exaggerated the likely long term effects of the spike in players. For example, we saw the actual numbers of players in global online games return to pre-lockdown levels by September. People were clearly aching to get their home games back to the pub A.S.A.P.
We will probably see another jump in player numbers over Christmas as winter and further lockdowns kick in. But the effects of such bumps seem temporary rather than long term.
You wouldn’t know that from the stock market though.
The extraordinary madness of crowds
Future value is supposed to be built into current stock prices. That is, if you believe in frictionless markets and perfect information. But watching online poker stocks shows just what a jumpy primate homo mercator is.
And just how focused on COVID headlines.
Monday, November 9th, Flutter PLC was priced at 13,390 GBX (GBX = pennies sterling). That’s the day that Pfizer issued a press release that their new vaccine was “over 90% effective at preventing COVID-19.”
The next day Flutter was worth 12,790 GBX per share.
Almost immediately, op-eds from the scientific community warned us that the vaccine would be expensive, be difficult to transport, have limited availability, and not be available for months. Flutter rebounded on the 11th.
The headlines changed over the course of the week to a more measured optimism about what this means, and Flutter closed today on the London exchange at 13,000 GBX.
“In the long term, we’re all dead”
This reflects a long term trend in poker stocks over the year. If you line up Flutter, the Rank Group, GVC Holdings, and Gamesys stock prices for the YTD, you see an obvious pattern.
They all took a sharp hit around April as the world panicked and (most) governments people started taking COVID (mostly) seriously. Then, as the data on player numbers started to come in, the stocks begin a gentle rise. The more online holdings the sharper the rise.
This is the period rich in “2020 Poker Boom” headlines. The actual number of global players peaked early in lockdown and slowly declined until re-opening. But stocks all tracked the other way, rising to a peak in September at around or above pre-lockdown levels.
They all took a one-day dive on Pfizer-day, came back a bit, and floated on. It’s like a ballet.
By comparison, look at Ladbrokes or William Hill, whose online offerings are dwarfed by the number of main street betting shops they own.
Their graphs look similar at first, taking that April hit. But then they stayed down until lockdowns lifted in September.
But looks like when it comes to online poker stocks, as at the table, most people are playing the players rather than the cards the company holds (or deals).
Even if that means betting against things getting back to normal.
Featured image source: Flickr