The 888 Holdings (LSE: 888) share price has taken to the skies this week, rising 28% today and 43% since Monday morning. This has lifted the shares above the 100p mark for the first time since the end of January.
However, the stock was trading at 458p just over 18 months ago. So it will take a Herculean share price rally to ever reach those heights again.
What’s been causing this extreme volatility?
Turbulent times
To recap, the online bookmaker has been in almost permanent turmoil in recent times. Last year, it was fined £9.4m by the UK’s Gambling Commission for social responsibility and money laundering failings. This followed a £7.8m penalty in 2017, which was a record at the time.
Then in January, chief executive Itai Pazner announced his resignation after revealing the firm had launched an internal investigation into suspected money laundering by VIP customers in the Middle East. Prior to this, the chief financial officer had announced he was stepping down.
Also worrying is that the firm is saddled with around £1.7bn of net debt after merging with William Hill International last summer. And William Hill has itself been hit by a record £19.2m fine by UK regulators this year, though this settlement relates to the period before 888’s ownership.
In 2022, the company posted a £115m pre-tax loss due to costs associated with this merger. It is yet to appoint a new CEO.
Why are the shares rising?
It emerged yesterday that certain executives within the gambling industry have taken a fancy to the company’s fallen shares. Regulatory filings revealed that US-based FS Gaming Investments had built a 6.6% stake in the company.
This investment group includes Kenny Alexander, Lee Feldman, and Shay Segev. Alexander was formerly chief executive of GVC Holdings, the Ladbrokes and Coral owner now known as Entain. He was replaced by Segev, who subsequently stepped down to lead sports streaming platform DAZN. Feldman chaired GVC Holdings for 11 years before moving on in 2019.
So these are gambling industry veterans who are building a substantial holding in 888. The natural assumption then is that a takeover bid may be on the cards. If so, this could presumably result in a refinancing of the company’s debt, which might help rebuild value.
To buy or not?
Based on recent issues, I don’t think I’d sleep easy at night investing in this stock. I wouldn’t know what headlines I might wake up to next!
To be fair though, this is an industry where lots of bookmakers are falling foul of regulators. Entain, for instance, recently said it expects to incur a “substantial financial penalty” following an investigation by UK authorities. This relates to possible bribery offences by one of its former Turkish subsidiaries.
Long term, I don’t see any let-up in the regulatory scrutiny of betting firms, both in the UK and abroad. Even the Premier League recently announced a ban on gambling sponsorship on the front of football shirts, which will begin at the start of the 2026/27 season.
There may well be further share price gains if an actual takeover offer materialises. However, I think there are safer stocks to buy today. So I’ll be focusing on those instead.
