Low William Hill share price great news for investors

william hill store front

William Hill share prices have dropped by around 50% since early January and its dividend was suspended in response to the continued Covid-19 crisis, therefore it has been no surprise to hear the rumblings of impending doom sounding from all quarters. Indeed only the foolhardy would be willing to invest in “Bill Hill” in the current climate, right?

 

Shorter-term prospects

The decline in William Hill’s share price is unsurprising given the current climate, the bookmaker heavily reliant on its retail operation which comprised around 45% of its revenues. The country is in the midst of a lockdown and all movement is currently uncertain with many of the world’s sporting events cancelled, however many opportunities still exist in the virtual sports betting market as well as the online gaming market.

Not only that but many William Hill employees are being financed through the UK government’s furlough scheme and as such, this has saved the company around £395 million in staff costs thus far. All advertising expenditure for the main sporting events of the year will also drop substantially.

All of this will assist in keeping William Hill afloat in these troubled times and the markets appear to agree with the share price climbing since the low it hit in March.

 

Longer-term prospects

Regulation is an ever-present threat and the implementation of a £2 limit on UK betting machines ultimately led to the decision to close over 700 betting shops last year. Nevertheless this company is a huge global player with nearly a quarter of its revenue coming from overseas, this in no small part thanks to its acquisition of Mr Green.

William Hill can also benefit from its US operations where it is extremely well positioned to take full advantage of the decision by the Supreme Court to legalise sports betting. This market alone could be worth in excess of $8 Billion by the middle of the decade, while the app and website are becoming ever more refined, thus aiding its online operations.

Indeed it could be argued that greater regulation has its benefits given that an increase in barriers could result in a higher market share for the bigger players such as William Hill. As such, while these remain uncertain times, there can be no doubt that normality will return and William Hill will once again thrive with all the bad news being a thing of the past.

With that in mind, we believe that an investment in William Hill will provide plenty in the way of return.