A Stock to watch: Optimal Payments PLC (OPAL traded in LSE)
This is a money mover and payment gateway company established in1999 in Canada. Its original name was Neteller. The company took advantage of the online gambling poker boom in 2003 and the exit of Paypal’s from the online gambling market as an opportunity to enter the online gambling market by providing money transfer service. The company is not by itself an online casino.
The company established a service center in Calgary targeting the US market. It was then the leader in moving money for online betting sites. In 2004, the company went public in AIM with a capitalization of ￡240 million. In 2005, the company processed $7.3 billion worth of financial transactions reporting a revenue of $172.1 million and a net profit of $91.5 million.
At that time, the company derived close to 90% of its revenue from market in the United States.
The good days of the company were over in 2007 when the US government sudden arrested the company’s founders when they were in transit in the United States while travelling and charged them for money laundering. They were only released after the company paid for them a $136 million fine. After this event, the company completely exited the US market.
Share price of the company plummeted from its peak of 760p to 50p. The Calgary service center was closed forever.
Its founders later rebuilt the business by merging with Optimal Payments, a payment gateway company and diversified its services from the online gambling to services for transactions of other merchandizes and created a popular money storage Mastercard for conveniently carrying money across borders.
In recently years, the US government gradually changed its rules and allowed online gambling to take place within the United States though it is to be regulated. Optimal Payments quickly teamed up with Casino operators such as Caesar Palace which established an online operation Caesars Interactive Entertainment and gaming hardware and software provider Bally Technologies, Inc. While till now, no one residing in US can sign up an account for money transfer with Optimal Payments, the company can still bring clients outside US to play games on the US sites to benefit the US economy.
Given the recently price performance and the large volume of transactions of this stock, it is not unwise to speculate that business of this company has some break through and has substantially improved. Whether one decides to hold this stock or not, it is definitely interesting for one to follow the story of this stock. Unlike the early years, risk of holding this company is reduced because although transfer of money for gambling site is still bread and butter of this company, the company has diversified significantly and successfully that now about 40% business of this company is not related to online gambling. That 40% cannot be easily killed.
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