Entain share price: Time to buy this fallen angel?

Entain (LON: ENT) share proce has been in a steep sell-off in the past few months as the company has gone through several self-inflicting wounds. The stock retreated to a low of 817p this week, the lowest level on record. It has crashed by over 635 from its pandemic-era highs.

Activist investors pressure

Entain is one of the biggest sports betting and online gambling companies in the UK. It owns some of the top brands like Coral, Ladbrokes, TAB New Zealand, Eurobet, and Sportingbet. It also has a stake in BetMGM, one of the leading players in the American market.

Entain stock price has underperformed other companies like Flutter Entertainment and DraftKings. This happened as the company faced numerous self-inflicting wounds such as a big fine in its Turkish operations. The management also raised capital to acquire a Polish business.

Entain’s growth has not been great. After years of double-digit growth, the company is no longer growing as it used to in the past. In the third quarter, its total Net Gaming Revenue rose by 7% while online NGR rose by 9%. Most of its growth was driven by BetMGM, whose revenue expanded by 15% to over $458 million.

In its guidance, the company said it was focusing on its key markets like Brazil, Central Europe, and New Zealand. It hopes that its investments in these countries will help to offset a slowdown in the UK where regulators have gone on a crackdown.

Entain’s woes are a sad reminder that it rejected a takeover bid by MGM Resorts International in a 8 billion pound deal. DraftKings also proposed to buy Entain in a $22 billion deal. Today, the combined company has a valuation of 5.4 billion pounds.

All this explains why activist investors like Eminence, Sachem Head Capital and Dendur Capital have taken a stake in the company. They are putting pressure on the company to change its strategy and reboot its share price. One of the suggestions is to replace Nygaard-Andersen as the CEO.

The biggest question is whether it makes sense to invest in Entain as it trails its peers. I believe that Entain is a good company that has strong brands in the UK, US, and other countries. While competition is rising, the company will likely do well, helped by its BetMGM stake. 

Entain share price forecast

ENT chart by TradingView

Turning to the daily chart, we see that the Entain stock price formed a slanting triple-top pattern whose neckline was at 1,151p. In price action analysis, this pattern is one of the most bearish signs in the market. 

The shares have remained below this neckline since August this year. It has also slumped below the 50-day and 100-day Exponential Moving Averages (EMA). it also moved below the crucial resistance point at 975p, the lowest swing in July.

Therefore, the outlook for the ENT stock price is bearish for now, with the next point to watch being 800p. In the long term, however, there is a high possibility that it will bounce back and retest the resistance at 975p.