NetEntertainment looks attractive


NetEntertainment is a company that develops online casino games and software.  They have developed many very popular games such as StarBurst, Gonzos Quest,  Mega Fortune, and South Park:  Real chaos.   The company used to be market leading but have faced increased competition from new smaller development that offers games developed around new ideas and new concepts.  This increased competition has caused NetEnterainment to lose market share, and the Nasdaq listed stock has lost more than 64% of its value in the last 3 years and is now trading around USD 3 a share.  We think that the stock is very attractive at this level and we think that the stock is a candidate to double in value in the next two years.

We think the stock will go up in value for the following reasons:

  • NetEntertainment keeps buying back stock. The number of outstanding shares keeps going down.  This will help prevent the stock from going down in value and will allow the stock price to go up faster when the companies fortunes improve.
  • The company has a history of high dividends.  The dividends are likely to return when the company has finished buying back stocks.
  • dead or alive 2The company has relationships with a very large number of online casino operators.  See this NetEntertainment casino list for a small sample of the casinos they cooperate with and to find out more about the games they develop. The company can easily leverage these connections to quickly get new games and other products into online casinos.  The profits can go up very quickly if they are able to release a hit game or two. The newly released dead or alive 2 seems to gain a lot of popularity and seems to be a hit that can earn the company a lot of money.
  • NetEntertainment has started expanding in North America.  A market they have had little to no presence on in the past.  They have written a contract with draft kings to provide casino gaming in two Canadian provinces.  The company will also cooperate with draft kings to offer online casino gaming in New Jersey.
  • Pennsylvania is also set to allow online casinos in the state, and we do not doubt that NetEntertainment will be a popular game provider.  More states are bound to follow, and the US market will allow NetEntertainment to grow their turn over and profit.

This is just our thoughts and not investing advice.  Always perform you own analysis and form your own conclusions before you invest.