When last reported on Online.Gambling.org, NetEnt was showing first half of 2016 revenue numbers up by 30 percent. That continued a pattern of slow and steady growth since the company’s inception in 1996. Now, as of late October 2016, nothing has changed that would diminish a very impressive upward trajectory. Continuing with exciting new products and led by savvy executive management, NetEnt shows no sign of letting up.
Net Entertainment is a publicly listed company on the Nasdaq Stockholm Large Cap (ticker NET–B). Since their IPO in 2007, the share price showed a gradual increase. But since 2012, shares have increased 710 percent. The question for investors now is whether the stock is overpriced with too high of a valuation. Investors are undoubtedly pricing in future growth, but being a Swedish company also has something to do with it. Bank interest rates in Sweden are below zero (in other words, negative). Investors are forced to put their money anywhere they can possibly see some appreciation, hence NetEnt stock.
When interest rates in Sweden peaked at 2 percent at the end of 2011 is when NetEnt’s share price took off. But now, inflation is starting to creep upward, and the only way the government can combat that is to start raising interest rates. Once that happens and investors can get a higher yield from bank notes than NetEnt stock, as investors bail out, the share price has to come down.
But in the meantime, the company is still doing well and there’s no reason to sell the stock now. With one of the most efficient work forces in the gaming industry, NetEnt currently has 657 employees, up from 513 employees in January. In the latest quarterly presentation, CEO Per Eriksson ticked off the company’s achievements. First, a new launch in Romania and then increased growth in the UK, despite Brexit and a collapsing pound. Mobile gaming revenue showed an increase of 83 percent. And NetEnt will seek a gaming license in British Columbia in the fourth quarter.
That all looks great to shareholders, but the company still has too much reliance on slot gaming that is almost 90 percent of its game win. That is expected to change soon with the rollout of its new live casino product. CEO Eriksson believes the new platform will be the best in the gaming market. And why shouldn’t he? With eight new customers, 11 new licenses and 32 customers that are booked and are still yet to launch, the future for Net Entertainment looks great, regardless of a potential looming price inflation in Sweden.