Playtech's share price has plummeted by over 60% following the payout of a special dividend nearly equivalent to two-thirds of its market capitalisation.
The gambling software company distributed almost £1.5bn as a special dividend from the sale of its Italian consumer division, Snaitech, to Flutter last year, as reported by .
Consequently, Playtech's shares dropped from 800p to just 316p. "The share price change is about in line with the special dividend," explained Ivor Jones, research analyst at Peel Hunt.
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Despite the drop, the City broker still rates the stock as a Buy, arguing that "Playtech is complex but worth the effort."
Jones further explained: "If one were to take 490p (the dividend) off our previous 1,000p target price, you would get to an implied 510p which implies a 62 per cent upside."
The sale has transformed Playtech into primarily a business-to-business player, compared to a year ago when it was evenly split between B2B and consumer focus.
According to Peel Hunt, most of the company's value now comes from providing a technology platform for online gambling and the services needed to operate it, along with its software as a service arm, which offers gaming content to operators for a revenue share.
"It has a sustainable business model, multiple investments coming to maturity, and a highly incentivised management team," added Jones.
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However, analysts pointed out that Playtech's previous low last year was 442p, compared to its current share price of 316p.
In its annual results released in March, Playtech surpassed analyst predictions with an adjusted operating profit of €480m, outperforming the anticipated €474m. The firm saw robust growth in the US, with revenues leaping by 19% to reach €252m.
Playtech also increased the valuation of its shares in several other businesses, including a stake in Caliente now worth €802m (up from €730m last year) and a stake in Hard Rock Digital valued at €141m (a significant rise from last year's €77m).