It looks like William Hill is in its own recession even before the real one has gotten started. The bookie is already approaching all time lows hit almost exactly 10 years ago on November  19th, 2008, at 98.07. It can be very tempting to try and pick a bottom here, especially with the dividend yield now surpassing 8%, and while there is a case to be made for buying now after this incredible plunge, I believe at this point William Hill shares need a wait-and-see approach.

The bullish case is that the company is fundamentally sound and approaching all time lows on the back of balance sheet impairments of nearly £700M. This was caused by the Triennial Review that will take maximum bets on B2 games down to £2 a stake starting next October. Impairment shows up in earnings and earnings don’t look great right now, hence the stock’s collapse. Retail is struggling but the decline there is being made up for in the online segment, which had double digit revenue growth for the first half of 2018. William Hill’s partnership with Eldorado Resorts will give it a heads up on the opening US market. And they seem set on continuing their dividend as is, for now.

The bearish case doesn’t have much to do with the company itself, but what surrounds it. The most obvious elephant in the room is the upcoming Brexit vote in the House of Commons on  December 11th. Whatever the outcome, it will rock stocks one way or another all over the world, with the UK and European stock markets being Ground Zero. Company fundamentals matter not a whiff in these situations. Consider William Hill during the financial crisis of 2008. Operating profit was down less than 3% from 2007 to 2008. The sky wasn’t falling. See page 14 here.  Didn’t matter. Shares lost over 75% of their value in a year.

If Theresa May’s Brexit deal passes the House of Commons, William Hill and all other bookie stocks will skyrocket, briefly. If the deal gets voted down and we have a “Hard Brexit”, everything will crater as headlines will blare that everyone in the United Kingdom will imminently starve to death and sick people will perish from a shortage of medications because no trade is possible without Brussels and Downing Street signing off on it. Cannibalism will be commonplace and all of Britain will turn into a neverending episode of The Walking Dead. And not one of the good episodes either.