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London AIM Drop

Neteller reentered the London AIM last week and though the significant drop in value was hardly a surprise for many, the company’s pre-tax loses were primarily to blame. Neteller has made international news in the past eight months as the United States Department of Justice basically made an example of Neteller for the rest of the world because Neteller processed illegal online casinos transactions. Last January the DoJ and the FBI began a formal investigation into Neteller’s illegal online casino operations and shortly thereafter arrested the company’s two co-founders. Now that Neteller is on the other side of the Neteller debacle though many of the shareholders have lost faith in the company’s ability to rebuild after the multi-million dollar fines in the U.S.

Proof of the shareholder disbelief can be seen in the 65 percent drop that Neteller shares experienced by the close of its first day back to trading on the London AIM. Neteller also just published the company’s 2006 annual reports and 2007 Q1 and Q2 results – and shareholders were less than thrilled at the huge operating loss the company has experienced because of the U.S. fines. The U.S. used the 2006 Unlawful Internet Gambling Enforcement Act (the online casino ban) as a basis to impose the hefty fines.

Though some industry analysts say there is some hope that Neteller could remain a prominent e-wallet for the online casinos industry, others doubt that the company will ever truly hold the same place in the industry. This dismal outlook is, in part, because Neteller is extremely wary about performing online casino transactions in risky markets after the problems with the U.S. DoJ and for those reasons may never truly assert dominance in the e-wallet industry.

The company’s shares are an important concern at Neteller, and CEO and President of Neteller, Ron Martin commented that “the restoration of trading in the Company’s shares marks the first step in a new chapter for the Neteller Group following our resolution with the US authorities announced last week.”

Losses for the 2007 fiscal year are mounting as the company will also be forced to expend some money enter new online casinos markets and gain a larger customer base in Europe and Asia. For that reason, many of the shareholders who have not been able to disassociate from the company while its trading was halted on the AIM took the first opportunity to sell company shares.