PartyGaming Down but Not Out

Shares in PartyGaming (LSE: PRTY.L) crashed last week as investors lost faith in the struggling online gambling company, however the company released a statement today encouraging investors to hang on to their PRTY shares.

PartyGaming had been steadily recovering for most of 2007, with the share price reaching the mid-50's at one stage, but the downhill slide began when it became apparent Rep. Barney Frank (Chairman House Financial Services Committee) was no longer planning a UIGEA repeal bill, but rather a watered down bill. Whilst always optimistic, few in the industry are giving the bill much chance of success in Congress.

The share price dipped to around 40p after investors were disappointed by the Frank replacement bill, and was holding steady near that mark for awhile until the CEO of PartyGaming, Mitch Garber, sold 5 million of his shares at 39p. That triggered a semi-crash, not helped any by the news that the US DoJ was able to squeeze a conspiracy guilty plea out of NETeller founder Stephen Lawrence late last month.

In the midst of all this, PartyGaming announced they had contacted the Attorney's Office for the Southern District of New York to answer questions about their involvement in the US market pre-UIGEA. Some analysts had a bullish view about this development, saying it was an important first step for PartyGaming as it seeks increased legitimacy. But investors disagreed and the share price continued to drop.

The share dropped near the 30p mark with many analysts speculating it could drop even further yet. The PartyGaming board has noticed the slide and released a statement yesterday saying the company was confident about its prospects for 2007, adding 2nd quarter financial performance met expectations.

"While the important fourth-quarter period lies ahead, the group remains confident about the prospects for the full year," PartyGaming said in the trading update. First-half results for 2007 are due August 29.

The share price bounced following the encouraging trading update, and are currently trading at 33p (at time of writing).

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