Hi Charles,
Thanks Charles much appreciated, its been a testing time on occasion but now to manage the move as it unfolds in the key!
Regarding LNW, although this $11.2bn Las Vegas based gaming stock has corrected ~25% from its 2024 it’s actually still up YTD, so it’s been all about timing this year. As you say August’s earnings were good and ~7% ahead of expectations, although guidance was conservative, but as a rule of thumb we like companies that “Under promise and over deliver”.
In late September Aristocrat (ALL) won a court injunction against its main rival Caledonia-backed pokies maker LNW forcing it to stop the rollout of its popular dragon-themed game in the US. It’s something out of a spy movie with allegations LNW stole trade secrets to rip off one of its most popular games, Dragon Link. ALL claims former Aristocrat employees, who now work for Light & Wonder, misappropriated trade secrets that violated laws in Nevada.
- LNW will appeal the decision but for now investors are assuming the only winners will be the lawyers.
- LNW claim Dragon Train would have contributed less than 5% to the $US1.4 billion ($2 billion) targeted adjusted EBITDA for 2025.
However, future earnings from the game were one of the reasons the stock ran hard before the ruling. ALL is the big brother here with a market cap of $36.1bn and from all we read the courts decision looks likely to be upheld hence what’s LNW worth following this adverse IP ruling?
We see LNW continuing to gain share as a dominant 2nd player in land-based slots and delivering double digit growth over time, believing they have a good growth profile and that looks attractive around current levels.
