March 24, 2006
SpeculatingStocks.com Stock Pick: WPT Enterprises, Inc. (WPTE)
Stock Price: $6.17 (long-term strong buy)
"WPT Enterprises produces the revolutionary World Poker Tour shows on Travel Channel and is just starting to exploit the online poker craze. Now's the time to get a rare corporate piece of the poker action as WPTE continues to hold strong above its 52-week low."
Industry: Broadcasting - TV
Market Cap: $124.37 million
52wk Range: $5.65 - $29.50
Shares in the Float: 5.9 million
Percent of Float being Shorted: 31.54%
WPTE News Stories
February 13, 2006: WPT Enterprises, Inc. Reports Fourth Quarter and Full Year Fiscal 2005...
February 13, 2006: GamingIndustryStocks.com -- Worldwide Online and Mobile Gambling...
February 8, 2006: WORLD POKER TOUR(R) Scores Full House With Fourteen...
February 7, 2006: WPT Enterprises Engages Advisor to Explore Strategic Alternatives
The market turned sour on WPTE when investors realized that the company's online poker operations would not grow as quickly as everyone thought. One reason for slower than expected growth is the fact that WPT Enterprises is an American company and can not allow United States gamblers to play for real money on its online poker tables. Party Poker and other online poker operations are based outside of the US and receive heavy business from US poker players. This is all unfair to WPT Enterprises, but laws are laws and we feel strongly that the international poker scene will recognize WPT Online.
Lakes Entertainment, a 60% owner of WPTE, wants rid of its share. We see this as a bad move on their part, but a good move for WPTE. If a 60% owner comes in that has an interest in the online poker industry, then WPT Enterprises will have more of a drive to succeed and take on PartyPoker.com. It is baffling that the cross selling opportunites between the TV show and the online poker site are not working well. Losing out on the whole US market is a huge downer. The stock has already absorbed this shock. Even if the company does sell out, they are in a decent position to bargain and create a premium for shareholders.
It is clear that WPTE is counting on the internationalization of poker. This will happen, but it will take time and WPT Enterprises has to make the right moves in the international TV space. A captive international audience will translate to loyal poker players sitting at their online poker tables.
At this price it is well worth taking the chance. Looking ahead, 2006 could turn out to be a highly profitable year for WPTE as they start airing Professional Poker Tour shows after finally reaching a deal with the Travel Channel. The expenses for the PPT have already been accounted for, the profits are still to come.
SpeculatingStocks.com Target Price: We expect WPTE to reach $10.00 within the next six months.