While no gaming market looks especially safe to invest in an absolute sense right now, the Swedish market looks to have one of the more favorable risk profiles. Here we’ll take a look at NetEnt to make that case.

Nothing particularly exciting is going on with NetEnt at the moment, and its stock price has reflected that over the last two years. Shares have fallen 60% since mid 2016, clinching levels not seen since 2014. Both revenues and earnings have more than doubled since then, so there’s a long term disconnect here. Dividends have also climbed 170% per share. The simple conclusion is that either NetEnt was overvalued then, or it’s undervalued now, but probably some combination of the two.

Back in 2014, NetEnt was a rip-roaring explosive growth company. Now it’s not anymore, for now at least, but that doesn’t mean a 60% fall in shares was warranted. NetEnt isn’t declining overall. It is still comfortably profitable, it has no debt and an overall very healthy balance sheet. It’s just that its major markets look to have matured and it needs a new way forward. This is just the next step in company development it has to confront.

The transition from momentum stock to stable income stock, which NetEnt looks to have crossed, means that speculators stop chasing it higher, and a decline ensues. Exacerbating the decline in this case may be the new Swedish gaming regulatory regime, which is adding an 18% gaming tax in 2019 that NetEnt has warned will affect revenues negatively.