Well, who would have thought it? Massively hyped on-line gaming company floats on the stock exchange and a few weeks later its share price tumbles?
http://news.bbc.co.uk/1/hi/business/4217990.stmAre investors stupid? It was perfectly obvious from the start that this would happen. Maybe the investors weren't stupid as they knew that buying shares when it floated and then selling them pretty much straight away would make them a lot of money. And I suppose the company's owners didn't give a toss because they were out to make a fortune on the initial flotation. But what about the people who are losing out and all the people who seem "surprised" by this?
Partypoker is one of many (and I mean many) on-line gaming sites offering the same thing. They are not offering anything unique and not even something that people really 'need'. It's not like they have a product that is revolutionary and everyone wants. Just like any other gambling site (or web site for that matter), not everyone that signs up will actually spend any money!
This "smacks" of the doomed freeserve flotation a number of years ago. People bought into it thinking "this is amazing, look at the subscribers". But what were they offering? Free internet access....
Every ISP soon followed and freeserve were no longer unique. They didn't even make people sign up to twelve month contracts. Yes, they had advertising revenue...but who the hell was going to see that? If someone downloads Freeserve's personalised web browser then they may see the freeserve home page when they surf the net....but this is easily changeable and no doubt most subscribers had changed to having the BBC web site as their home page in no time.
Why do investors and the media fail to see the downside to these on-line companies? Amazon is quite different in that it actually has 'assets'. It owns warehouses and has stock and also sells products that people want and will continue to want when fashion changes. Google is also different in that people can't avoid the adverts it displays.
I have nothing but respect for the owners of partygaming who, two months before the flotation of partypoker, launched a massive advertising campaign designed to increase subscriber numbers....This data they could then use to lure prospective investors (hey, look...If it stays like this then we project that in a year...etc etc...bullshit bullshit bullshit...)
To the investors in PartyPoker who lost out...Fools! You bloody deserve it for being so bloody stupid! You can look at your projections and your statistics all you like...But why not step back and look at the reality!