888 Holdings (LON: 888) share price will be in the spotlight on Thursday as hopes of an acquisition jumped. The stock has been under intense pressure and was trading at 81.70p, the lowest point since July 17th. It has crashed by more than 39% from its highest point this year and by 83% from its all-time high.
DraftKings and 888 deal888 Holdings is a leading company in the sports betting and gambling industry. It owns some of the top brands in the industry like William Hill, 888casino, 888sport, 888poke, and Mr Green. It has operations mostly in Europe.
The main catalyst for the 888 Holdings stock price is a report that DraftKings had discussed making a bid for the company. DraftKings proposed making an all-stock acquisition. It is unclear whether DraftKings will still pursue the all-stock transaction.
There are two main reasons why DraftKings would want to acquire 888 Holdings. First, it would give it exposure to the European market, which is a big one in terms of sports and gambling.
In this case, it would help it to diversify its revenue since it now generates most of its results in the US. DraftKings has tried entering the European market in the past. For example, it made an 18 billion pound deal for Entain, the parent company of Ladbrokes, Coral, and BetMGM.
Second, 888 Holdings has become quite undervalued because of its recent upheavals, including tax issues. The company is now valued at just 365 million pounds or $448 million, which is much lower than DraftKings $16.8 billion.
In its recent trading statement, 888 Holdings made 405 million pounds in the third quarter, down by 10% from the same period in 2022. Its UK&I online business saw monthly users jump by 10% while revenue fell by 10%.
According to the Financial Times, DraftKings ended talks to acquire the company after UK regulators placed its license under review. The main cause of the review was a long tax bribery issue in Turkey.
While DraftKings might not pursue a deal, there is a likelihood that the company will be acquired by either a bigger competitor or a private equity company. An acquirer would hope to improve the business and its profitability. They would also want to reduce costs and increase its international presence.
888 Holdings share price forecast
The daily chart shows that the 888 stock price formed a double-top pattern at 126.4p. In price action analysis, this pattern is one of the most bearish signs. The stock has now moved below the 50-day and 25-day Exponential Moving Averages (EMA). It is now trading slightly above the neckline of this double-top pattern at 75.75p.
Therefore, based on technical charts, the outlook for the stock is bearish. This view will be confirmed if the price moves below the important support level at 75.75p. If this happens, the next support level to watch will be at 50.40p, the lowest point on April 5th. This price is about 38.45% from the current level.
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