Betfair stock plunges on weak results

SHARES in Betfair, the world's largest betting exchange, plummeted yesterday after the company reported lower-than-expected half-year earnings.

The stock plunged 16 per cent to 990p - well below its 1,300p flotation price in October's initial public offering.

Betfair - founded ten years ago by one-time professional gambler Andrew Black and former JP Morgan trader Edward Wray - said results in poker had fallen short of expectations, while the cancellation of horse racing meetings because of bad weather had moderated growth rates in the current quarter.

James Hollins, an analyst at Evolution Securities, said core earnings were below his estimate and the market consensus.

"We find it hard to marry the group's premium rating with myriad regulatory issues and the need to 'address challenges' in its core horse racing product," Hollins said.

Betfair's chief financial officer, Stephen Morana, said the group's target of returning to 2010's levels in poker in 2011 was not likely to be met, with core poker revenue down 6.5 per cent because some users left after being moved over to a new platform.

The firm said it would address the issues in poker and horse racing with a number of initiatives in the second half.