Investment

Gambling stocks in freefall as rising oil and gas prices cause global market declines

Conor Mulheir photo

By Conor Mulheir - 8 Mar, 2022

More about the author
igamingnext photo
When the stock market sneezes, the gaming industry catches a cold, as proven by falling share prices during the current period of heightened uncertainty.

With the S&P 500 down 3.7%, the Nasdaq 100 down 6.2% and the FTSE 100 Index down 5.3%, gaming stocks, which have already experienced significant volatility in recent months, have tumbled even further.

Uncertainty driven by increases in the price of crude oil and natural gas – a result of international sanctions imposed on Russia in response to its invasion of Ukraine – have caused a downturn in stock markets around the world.

Oil prices hit their highest levels since 2008 this week, and fears around rapidly rising inflation in the cost of living have combined to send share prices through the floor.

The gaming industry, which had already been suffering from high levels of volatility since last year, as well as an unusual operating environment due to Covid-19, has seen prices slide further than many other industries as growth stocks appear to have become a bear market for now. 

Evolution shares are trading 11.0% lower in the past week, with major operators like Entain down 10.6% and Flutter Entertainment falling by 13.8%. Shares in Scientific Games have crashed by 14.5%, while shares in Nasdaq-listed DraftKings – which were already in freefall – plummeted by another 16.8%.

It is not just the gambling sector suffering, either. Stock market behemoths like Meta, Google and Apple are down 10.9%, 6.2% and 3.3% respectively over the past five days.

While many investors will see their portfolios run red due to the downturn, others will strike while the iron is hot and see this as an opportunity to purchase cut-price stocks.

Yesterday, the ARK Invest exchange-traded fund (ETF), managed by longtime fintech investor Cathie Wood, made a swathe of trades. It offloaded more than 368,000 shares in Twitter but, interestingly, bought up 279,441 DraftKings shares.

ARK has been bullish on the stock for a while and appears to be predicting an upturn in the company’s value after a steady share price decline over the last several months, from a 52-week high of $74.06, to just $18.05 as of yesterday.

Pre-market trading suggests the stock may have bottomed out, with the price up 1.2% from yesterday’s close at $18.26.