Entain to Exit FTSE 100 After Share Price Decline

Entain plc is set to be relegated from the London Stock Exchange’s FTSE 100 index, moving to the FTSE 250 in a change that will take effect on 21 September. The demotion follows a sustained period of decline in the company’s share price, which has seen its market capitalisation fall to its current level of £3.39 billion.

The operator, formerly known as GVC Holdings, first joined the blue-chip index on 22 June 2020. Since reaching an all-time high in September 2021, its share price has slipped by 73% to 530p. Over the past year alone, the company’s stock has dropped by as much as 37%.

The company’s valuation has been impacted by significant challenges, most notably a financial penalty agreed in November 2023. Entain consented to pay £585 million, along with a £20 million charitable donation and £10 million in costs, to resolve a Crown Prosecution Service investigation into alleged bribery connected to its historical operations in Turkey.

Strategic Shifts and Turnaround Efforts

In response to its difficulties, Entain has embarked on a strategic overhaul under new leadership. The first quarter of the year, which was Stella David’s first as full-time group CEO, saw the company report double-digit growth in its digital division. This performance was attributed to strong results in the UK, Brazil, and the United States.

Further positive indicators were noted in the first half of the year, with Australia, New Zealand, Spain, and the UK identified as core growth drivers. The company has also appointed a new Chief Financial Officer, Michael Snape, who started in August. As part of its strategic refocus, Entain is exiting its business in Central and Eastern Europe, with proceeds from the sale intended to reduce group leverage to below three times and return excess capital to shareholders.

Analyst Outlook

Market analysts have responded positively to these recent developments. A note from Goodbody on 13 August stated that Entain’s adjusted EBITDA for the first half of the year was comfortably ahead of expectations, describing its UK and Ireland performance as a 'standout'. Following this, a 14 August note from UBS reiterated its 'buy' rating for the operator’s stock, signalling confidence in its future prospects despite the index demotion.