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Thread: Amaya stock CRASHES, blame put on strong US dollar

  1. #1
    Owner Dan Druff's Avatar
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    Amaya stock CRASHES, blame put on strong US dollar

    Yesterday, Amaya (owner of Pokerstars) saw its stock fall from $23.56 to $15.99 on the NASDAQ, and even touching as low as $15.34 at one point. Overall, the company stock lost over 32% of value on Tuesday!

    Below is an article where Amaya blames the strong US dollar for its stock price woes:

    http://www.theglobeandmail.com/repor...ticle27186220/

    Note that this article was written when Amaya was still trading at $20.22, which was still a 52-week low for the stock!

    Investment analysts at Canacord Genuity have rated Amaya as a "buy" at this point.

    Amaya CEO David Baazov said this:

    The general strengthening of the U.S. dollar relative to certain foreign currencies, primarily the euro, has resulted in an approximate 19 per cent decline in the purchasing power of our customer base and has had a significant negative impact on our revenues, higher than we previously anticipated,

    I don't know if I believe this.

    Most of Pokerstars' clientele uses the Euro or GBP.

    Here is the chart for the USD's strength versus the Euro, over the past year: http://www.xe.com/currencycharts/?fr...to=EUR&view=1Y

    Here is the chart for the USD's strength versus the GBP, over the past year:
    http://www.xe.com/currencycharts/?fr...to=GBP&view=1Y

    Notice both charts are fairly similar.

    The dollar had a huge run-up in early January, hit a high in mid-March, and then retreated somewhat over the summer.

    Then it started running back up in the last few weeks.

    But the bottom line is that the dollar is worth LESS right now (compared to EUR/GBP) than it was during March-April, and overall is fairly close to where it was after the initial run up in January.

    So how is Amaya only feeling this now, in November? Shouldn't they have been struggling in the early part of the year?

    But here is the cold, hard fact regarding Amaya's projected 2015 results:

    Amaya Inc. is reducing its revenue estimate for 2015 to a range of between $1.289-billion and $1.339-billion a decline of about 13 per cent at the midpoint from the previous estimate.
    So that's really the issue here. They estimated way higher, and now just broke the news that their revenue will be down 13% from where it was expected.

    I still think the strong dollar thing is BS, as that would have been seen fairly quickly when it shot up in January, and wouldn't have taken until November to discover and report.

    The decline in revenue also likely explains why they are engaging in so many changes in their business practices on Pokerstars, including degrading the top tiers of the VIP program.

  2. #2
    Silver Starbucks Spunk Bucket's Avatar
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    Quote Originally Posted by Dan Druff View Post

    I don't know if I believe this.

    Most of Pokerstars' clientele uses the Euro or GBP.
    I definitely don't agree with this, there is limited game selection and variety in playing in those currencies on the client, I always play USD unless I'm trying to qualify to some Euro/UK-centric tournament.
    BALLIN'!!

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    Quote Originally Posted by Starbucks Spunk Bucket View Post
    Quote Originally Posted by Dan Druff View Post

    I don't know if I believe this.

    Most of Pokerstars' clientele uses the Euro or GBP.
    I definitely don't agree with this, there is limited game selection and variety in playing in those currencies on the client, I always play USD unless I'm trying to qualify to some Euro/UK-centric tournament.
    Correction: Although to be fair the PokerStars client in Spain and France only uses EUROS, I'm assuming it's like that everywhere else where the currency is prominent in Europe.
    BALLIN'!!

  4. #4
    Owner Dan Druff's Avatar
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    No, what they're trying to say is that their currency and expenses are mostly in USD, so deposits bring in fewer USD to them than before, yet their expenses remain rhe same.

    So for example, when a fish deposits 1000 EUR, Pokerstars used to get $1250 from it (minus deposit fees), whereas now they only get $1070.

  5. #5
    Amaya is a joke...PokerStars is in bad hands.

  6. #6
    Quote Originally Posted by jacosta24 View Post
    Amaya is a joke...PokerStars is in bad hands.
    I sense you are a player. Wonder what country.

    It appears legislation worldwide is becoming a headache. Generally, the number of active players is declining.
    The PStars story is supposed to be growth. The changes you dislike aren't in effect yet. The cross sell to casino & sports betting didn't hurt your precious poker. I can't fault their operation. Poker is waning and they need to grow in other ways.

    I can fault the kid, Baazov, for not managing the earning expectations better. Still love this guy. From living on a park bench to spinning Amaya out of virtually nothing. He's younger than most of us.


    Has PStars gone completely mobile? Can people in the free world (ROW) get all the offerings on their hand held device? I get the sense that you still have to use an old Wintel pc and that's a fail.

  7. #7
    The whole Forex story makes no sense.

    I am also disappointed nobody got my CA "Gods currency" joke when I first posted this story last night.

    Amaya reports earning in Canadian dollars and indeed that went down last year.

    Somebody wrote me that their mobile apps suck. PStars was always about the beautiful software.

    Billions of dollars in debt. They need just one more piece of bad news before this is worth gambling on again.

    Edit: Oh, yeah. Rubio for President. Can't hide Druff.

  8. #8
    Owner Dan Druff's Avatar
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    Quote Originally Posted by Sanlmar View Post
    The whole Forex story makes no sense.

    I am also disappointed nobody got my CA "Gods currency" joke when I first posted this story last night.

    Amaya reports earning in Canadian dollars and indeed that went down last year.

    Somebody wrote me that their mobile apps suck. PStars was always about the beautiful software.

    Billions of dollars in debt. They need just one more piece of bad news before this is worth gambling on again.

    Edit: Oh, yeah. Rubio for President. Can't hide Druff.
    Yeah, I don't really understand the Forex thing either. They're based in Canada, so what does the US dollar have to do with this? As you noted, that also fell sharply against the USD in 2015.

    I was assuming that maybe they were still incurring most expenses in USD (such as salaries for employees, vendors, etc), but maybe this is just all pure bullshit to hide the fact that they just didn't do as well as they hoped.

    But even if the Forex story is true/semi-true, it still doesn't make sense how they were taken by surprise by it, as most of the "action" occurred in January.

    It is true that the Canadian dollar's decline versus the USD occurred mostly in the second half of 2015: http://www.xe.com/currencycharts/?fr...to=CAD&view=1Y

    However, the Canadian dollar wasn't part of their narrative. They were blaming it on the Euro, which makes little sense.

  9. #9
    Down another 7% at today's close:

    Name:  amaya_stk_price.png
Views: 282
Size:  6.1 KB


    Here is the biggest problem facing Amaya right now...which I cannot find a better way to express than "borrowing" this graph at PokerScout:

    Name:  PkrStrs 6 mo trend.png
Views: 279
Size:  10.9 KB


    The biggest worldwide online poker site is not growing, it's actually shrinking. Every analyst, shareholder and casual observer had been led to believe that poker is still a growth story on 'Stars, however, for the past 6 months, their main worldwide platform has seen a decline in players.

    One problem may be that recreational players can take losing over and over only so much. (Witness proposed rakeback changes to eviscerate the pros -- thus hopefully allowing rec players a bit more "play time" so as to reload - not QUIT)

    Either way, it's most hella-definitely likely not a "currency thing" as the Amaya CEO said.

    BTW, I think there's a chance Baazov is in the line of fire right now. Could be gone soon if the company wishes to place this situation on someone.
    Last edited by Forum Wars; 11-11-2015 at 03:32 PM.

  10. #10
    Owner Dan Druff's Avatar
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    For those watching, the differing numbers are between Canadian dollars and USD. This confused me at first, when I read the article I posted in the OP.

    So Amaya closed today at $14.80 USD after a low of $14.65.

    It has lost 37.2% of value in the past 2 days.

    OUCH!

  11. #11
    I was interested in your take on the last podcast as it was very informative. I didn't perceive the amount of Rackback and FPPs the 'grinders' were dependent on to make a living.

    Shame on them! Isn't enough they can beat the snot outta the rest of us they gotta suck the life outta PS? Agree with you that they should have left things in place until 2017 but they get too, too much from the site!

    While it may not be in the best interest of the lower stakes players, it's their site, if you don't like it, go whine someplace else.

  12. #12
    San knows this trick...when in doubt blame the currency headwinds (even if they have existed for awhile)...when you hear companies blaming currency fluctuations for missing earnings you know they are full of shit and just did not execute on their strategies...not saying that currency shit doesn't exist, but that shouldn't be the top reason for a company to miss earnings...

  13. #13
    “The general strengthening of the U.S. dollar relative to certain foreign currencies, primarily the euro, has resulted in an approximate 19 per cent decline in the purchasing power of our customer base and has had a significant negative impact on our revenues, higher than we previously anticipated,” Baazov said in a statement Tuesday.


    Here's that bullshit claim with the corporate-speak boiled out: our customers are not buying our services because they have less discretionary income due to the strong American Dollar...

    notice the claim is not that we provided poor service and loss share to competitors, nor that customers are spending their money on other forms of entertainment, or that Europe in general has had economic turmoil during the last year, nor even that we contracted with customers to provide Business to Business service with us incurring expenses in US dollars and the customers paying us in foreign currencies (doing that would allow for criticism of the mgmt for not hedging against foreign currency fluctuations)...uh uh, noooo, it's the strong American dollar cutting into our revenues (not our operating expenses) because our European and Latin America customers not having as much money to play with...

    my take...online poker has matured as an industry, the easy growth is over and is in the consolidation/deterioration phase...now its a matter of managing costs to maintain an adequate return on equity...a story repeated in every industry throughout time
    Last edited by GrenadaRoger; 11-11-2015 at 08:50 PM.
    (long before there was a PFA i had my Grenade & Crossbones avatar at DD)

  14. #14
    Owner Dan Druff's Avatar
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    The Motley Fool lives up to his name: http://www.fool.ca/2015/11/09/why-i-...-on-amaya-inc/

    (If the article asks for your e-mail address, just enter any BS e-mail and submit, and the rest will be readable. It doesn't verify.)

    (Okay, so it's not really the Motley Fool, but just a columnist on the site, but lol @ this article released like an hour before the stock crashed!)

  15. #15
    From Stockhouse.com's bullboards for Amaya stock (discussion board)...I tend to agree with this guy, and they're saying exactly what we're saying about the shammy explanation from Baazov re: "currency problems" --- I added the BOLD:


    http://www.stockhouse.com/companies/...ostid=24281515

    RE:Thoughts on Forex impact and timing

    I think Fundip's got it more or less nailed: they had a shtty quarter and thought they could skate past on transparent pretexts. Consider the fact that they named Greece & Portugal, two entirely insignificant markets, as prime drivers of a NINE FIGURE downward revision in guidance(!!)That's all you need to know to realize that they're really grasping for straws here. They likely figured there were enough different currencies involved in various capacities (aya debt, player funds, etc) that they could trot out a vague "FX troubles" explanation, not counting that they'd get immediately called out by an analyst (who I'm somewhat annoyed with for not pointing out that DB's stammering reply made absolutely no sense: "Yes, so from that perspective, we look at that as -- we recognize that there is a material deviation from the original guidance. It took a period of time to come to that realization, effectively. And it's just, the obligation to update came at this point in time.")

    Fundip's right: it's not all that surprising that an executive team would seek to blame vague-sounding external factors out of their control for weak numbers; it's pretty standard. What's truly galling, though, is not having a reasonable answer prepared when your sham pretext gets called out as being full of holes. Were they really so arrogant as to think "tee-hee, no one's gonna realize that the FX is unchanged since last quarter, and even if they do they won't have the stones to actually ask us about it on the call"? It's no coincidence that not a single person, including professional analysts, has been able to make heads or tails out of the Fx excuse. For all those trying to understand the magnitude of a 36% selloff, you can thank not only revised guidance, but also incidents like this that erode confidence in management's forthrightedness (or aptitude, take your pick).

  16. #16
    Has this ever applied to ANY poker business?

    A rock-solid poker business

  17. #17
    Silver Starbucks Spunk Bucket's Avatar
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    OK so at what stage is this stock worth buying into?
    BALLIN'!!

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