I believe a tech stock’s performance depends on its purpose. For example, a tech stock that has ride hailing applications may not be performing too well in the lockdown. On the other hand, a food delivery app is probably doing much better.
Software development companies specialising in online gaming platforms are a double-edged swords, in my opinion. Although sporting events may have been cancelled, casino games have seen a rise in popularity during the lockdown.
Tech stock extraordinaire
Gaming is big business. But Playtech (LSE:PTEC) isn’t your typical online gaming company. Since 1999, Playtech has grown to become the world’s largest online gaming software supplier. It employs nearly 6,000 people across 19 countries and possesses 140 global licenses. It has licence agreements with well-known names, including William Hill, Ladbrokes, and Warner Bros.
Playtech has operated very much in the background of the gaming industry, creating and delivering platforms for gaming companies. Throughout its 20 years of existence, it has made shrew acquisitions to further its product range and diversify its offerings.
Trading update and performance
Since the turn of the year, PTEC has lost over 40% of its share price value. I feel this presents a unique opportunity to grab bargain price shares in a great tech stock.
Playtech took early steps in response to Covid-19. And it has kept investors abreast of all its developments with updates in March, April, and May. Its main actions were to prioritise the health and wellbeing of its employees, and to preserve cash flow.
This meant Playtech’s employees began working from home in February, almost one month before the UK lockdown was imposed. Its board and executive management team took a 20% pay cut. Furthermore it decided to defer its current dividend.
Results for 1 January to 30 April fell in line with expectations. Playtech pointed towards the exceptional performance of its trading platform TradeTech, which benefitted significantly from the increased market volatility and trading volumes. Playtech also has over €600m in liquidity which should see it through a turbulent time. It estimated that €65m was saved by suspending its dividend payments. This a shrewd move that many companies have been forced to take.
Verdict
Overall, I think Playtech could be a bargain tech stock to snap up at its current price. I believe that Playtech’s diversified portfolio of products and services set it apart from other run of the mill tech stocks.
Playtech has a truly global reach, which will benefit it, especially during this turbulent time. Although the lockdown is still in effect here in the UK, many European and Asian countries are emerging from lockdowns. Playtech has significant interests in Asia and Europe.
To say the pandemic will not affect Playtech would be untrue. PTEC has been transparent in its performance over the past three months and about how the virus is affecting it. That said, analysts predict that there will be growth for this technology giant, which I feel will thrive as time goes on.