3 Ways Amaya Inc. Shareholders Could Earn a Big Return

Amaya Inc. (TSX:AYA)(NASDAQ:AYA) has a lot of upside, no matter what happens.

The Motley Fool

On Monday Amaya Inc. (TSX:AYA)(NASDAQ:AYA) reported that it had hired a special financial advisor in the wake of CEO David Baazov’s intentions to bid $21 per share for the company. So even though Mr. Baazov has made no formal bid, clearly this is a serious matter.

That being the case, it is not too late to buy Amaya shares. Below are three ways that the stock could increase even further.

1. The transaction goes through

Even though Mr. Baazov has made his intentions very clear, investors aren’t buying it. The company’s Canadian-listed shares still only trade for $18.50 as of this writing, meaning that shareholders would make more than 13% on their money if the deal goes through. That’s not bad for such a short time frame.

Importantly, Mr. Baazov clearly believes that Amaya is worth more than $21 per share. In fact, he has already made purchases at about those levels. So it’s very unlikely that this is a bluff.

2. Another bidder emerges

Soon after Mr. Baazov’s intentions were announced, The Business News Network reported that one prominent shareholder thinks that $21 per share is far too low, and that there’s no chance of a deal being done at that price.

That said, the shareholder does think that a deal will get done. And there are plenty of other suitors that would love to acquire the PokerStars franchise. For example, a European online gambling operator would love to pitch their offerings to the poker players on PokerStars or even integrate other forms of gambling (such as sports betting or casino games) into the PokerStars software. A bidding war could easily ensue.

3. The company realizes its potential

Despite some recent setbacks, PokerStars remains extremely valuable, and this value is not reflected in the current share price or even in Mr. Baazov’s bid.

There are a couple of key things to remember here. First, PokerStars has roughly 70% market share worldwide, which allows the company to offer the most games and biggest tournaments. This makes life very difficult for smaller competitors. Secondly, Amaya is only starting the roll out of its sports betting and casino games franchises. And finally, the U.S. market is slowly opening up–there was even a big development in New York State after Mr. Baazov made his intentions known.

So even if Mr. Baazov and Amaya can’t come to terms, shareholders should not despair. It might just be the best long-term outcome.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair holds shares of Amaya Inc.

More on Tech Stocks

man touches brain to show a good idea
Tech Stocks

Nvidia Stock Becomes World’s Most Valuable Company: Buy Now or Beware?

Nvidia (NASDAQ:NVDA) stock is now the world's highest valued company, with a market cap of US$3.34 trillion. So, is the…

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Lightspeed (TSX:LSPD) stock was supposed to surge after Dax Dasilva's return, yet it's still stagnating. So, what should investors do…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

1 of the Best Canadian AI Stocks (With Dividends) to Buy Now

OpenText is an AI stock that trades at a significant discount to consensus price target estimates in June 2024.

Read more »

online shopping
Tech Stocks

3 Reasons to Buy Shopify Stock Right Now

Improving earnings quality, sustained cash flow growth, and another reason support a buy-the-dip thesis on Shopify (TSX:SHOP) stock today

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 Canadian Growth Stocks I’d Stash in a TFSA for the Long Run

Here's why Constellation Software (TSX:CSU) and Shopify (TSX:SHOP) are two top Canadian stocks long-term investors should consider.

Read more »

Wireless technology
Tech Stocks

Predictions for the Top Canadian Tech Stocks in June 2024

Whether it's the growth of artificial intelligence or e-commerce, these three tech stocks offer massive growth in June and beyond.

Read more »

Golden crown on a red velvet background
Dividend Stocks

These 5 Stocks Have Unstoppable Dividend Growth

These five stocks can form a diversified stock portfolio of dividend aristocrats from the TSX.

Read more »

Online shopping
Tech Stocks

Up 42% from 52-Week Lows, Is Shopify Stock Still a Buy?

Shopify (TSX:SHOP) stock looks like one of Canada's best growth stocks. And right now, it looks like it's on sale,…

Read more »