Tighter regulation is good for the big incumbents in the long run because it increases barriers to entry and fixed costs, reinforcing oligopoly. Meanwhile the sector inexorably grows, and regulated crypto exchanges increasingly ban people for depositing funds from unregulated casinos. Regulators in any jurisdiction can just follow the money to shut down unlicensed operations like the US did to shut down online poker on black friday. In the long run global channelization will be at least two thirds and evolution will still be overwhelmingly dominant slice of a much larger regulated pie. Even if all their unregulated revenue disappeared tomorrow it'd still be a bargain. Whether they make or break next quarter's forecasts is just noise.
(1) Evolution earns 54% of its revenue from unregulated sources. If regulators shut down unregulated casinos, how will Evolution replace its unregulated revenue?
(2) Next quarter's forecasts are not that important for a long-term investor. If you look at my piece, I actually don't focus on next quarter's forecasts at all.
That said, the long-term is made up of short-term. Long-term investors should still keep an eye on how the company performs every quarter.
If the short-term shows recurring weakness, it will show up in the long-term.
As I like to say, the bottom is zero. 😛
It does look compelling at present prices, however.
Bottom is more than zero for those who speculated on margin! HAHAHA
Based on what I am seeing now, I don’t have enough evidence to justify buying EVO.
That said, for others that have more insights into EVO, this may be a compelling opportunity.
🤝
Enjoyed reading, thanks for the writeup - the argument regarding the bearish outlook for Asia regulation was clear and well-researched.
Glad you enjoyed it! It was fun studying Evolution. I hope to publish more analyses like this
As promised in the “Coming up next” section, I’ve just published my thesis on SISB Public Company Limited (SISB TB).
SISB is Thailand’s largest international school operator.
At 11x NTM P/E, I believe the market is underestimating its growth prospects and potential for higher capital returns.
Read it here: https://angsanaanderson.substack.com/p/sisb-why-i-see-an-opportunity-in?r=5rl2u5
Tighter regulation is good for the big incumbents in the long run because it increases barriers to entry and fixed costs, reinforcing oligopoly. Meanwhile the sector inexorably grows, and regulated crypto exchanges increasingly ban people for depositing funds from unregulated casinos. Regulators in any jurisdiction can just follow the money to shut down unlicensed operations like the US did to shut down online poker on black friday. In the long run global channelization will be at least two thirds and evolution will still be overwhelmingly dominant slice of a much larger regulated pie. Even if all their unregulated revenue disappeared tomorrow it'd still be a bargain. Whether they make or break next quarter's forecasts is just noise.
(1) Evolution earns 54% of its revenue from unregulated sources. If regulators shut down unregulated casinos, how will Evolution replace its unregulated revenue?
(2) Next quarter's forecasts are not that important for a long-term investor. If you look at my piece, I actually don't focus on next quarter's forecasts at all.
That said, the long-term is made up of short-term. Long-term investors should still keep an eye on how the company performs every quarter.
If the short-term shows recurring weakness, it will show up in the long-term.