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The Rise and Fall of Publicly Traded iGaming Affiliate Companies

The online gambling industry is in a state of flux. Affiliate marketers that specialize in promoting online gaming offers are both excited by new opportunities and concerned about the growing challenges they are facing. Some of the issues they are concerned about can be highlighted by studying the recessions some of the largest online gaming companies have faced in recent years 

You can find a summary of some of these problems below. We will also analyze the cause of some of these problems in the following section. 

Affiliate Networks that Have Nosedived in Recent Years

The following affiliate networks have witnessed their share prices drop sharply over the past couple of years. Since these companies rely heavily on revenue from online gaming companies they partner with, a large reason the stock prices dropped can be traced to issues in this vertical.  However, many of them have also seen their online casino websites being dropped down in rankings, mainly due to some more or less shady SEO practices. 

XL Media

XL Media is an affiliate marketing network that is publicly traded. The company participates in a wide range of verticals, but it is heavily concentrated in the online gambling industry. 

During its IPO, many investors were very bullish on the stock. However, it has taken a nosedive recently. 

An article syndicated to Yahoo! News talked about the stock price of XL Media last June. The author mentioned that the stock price had dropped 67% over the past year. The price is down 27% since 2016. The article cited this last caveat to point out that longer-term investors had not suffered as much, but most had lost money with the company since the initial public offering. 

A number of factors have contributed to the declining share price. Concerns about some of the online gaming markets the company participates in appears to have contributed. 

Earnings Per Share (EPS) had dropped by 40% before the stock price started to decline. Investors using the fundamental analysis strategies championed by warren Buffett and his protégés saw this as a cause for concern. Investors that did not jump ship had to endure the losses. Many of them stated that they wished they had relinquished their shares earlier. 

Catena Media

Catena Media is another platform that experienced a large dip in it stock price in 2019. In June, Simply Wall Street published a similar article detailing be state of that company‘s stock value. 

The stock price of Catena Media fell 53% during the prior 12-month period. In this case, the sharp drop in the stock price was surprising, because earnings per-share had increased over the same period. It appears that the market was overly optimistic about the future of the stock. The stock might be due for a correction if earnings remain strong, but investors will need to reset their expectations on earnings if additional challenges plague the online gambling market. 

Raketech 

Raketech is there another affiliate platform that has a lot of online gambling offers. Stock prices for this company fell 35% in 2019. During the final quarter of 2019, share prices for Raketech fell 12%. 

What factors played a role in decline of online gaming affiliate networks? 

The digital gaming industry has faced its share of ups and downs in recent years. Some of the factors that adversely affected the online gaming market appear to have played a role in declining stock prices. Some of these issues are listed below. 

Slower than expected growth in regulated US markets 

A handful of states in the US have passed legislation to legalize online gambling to some degree. Unfortunately, the markets in those jurisdictions have not proven to be as resilient as executives and investors initially hoped. Discussions about forming interstate compacts have stalled and some markets have been too small to gain traction. 

Tougher regulations in Europe take their toll

In the absence of a broad legalization of online gambling in the United States, online gaming providers remain heavily dependent on European players. Unfortunately, a growing number of regulators have made things more difficult. 

A number of new laws have hindered industry growth. Italy recently passed a law banning all forms of gambling advertisements in the country. A few years ago, the United Kingdom passed a point of sale tax on digital gambling revenues, which has slowly curtailed revenue growth by driving some companies out of the market. 

Speculation about other laws has made some companies apprehensive about scaling their operations. They may be more hesitant to make risky expansion decisions until these countries agree to take a more lenient stance.

Online Gambling Markets Could Roil Affiliate Networks and Harm their Share Prices

Affiliate networks participate in a wide range of verticals, but the online gambling industry is one of the most lucrative. Affiliate networks need to make sure that they understand the issues surrounding this sector. It could have a strong impact on their future stock prices. 

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