Buy A Piece Of The WSOP

If you think this post is about me selling off pieces for my trip to this year's WSOP, then guess again.

On Wednesday, Caesars Entertainment will have a stock IPO of $9 per share. They have been a privately owned company since 2008. They had planned on doing an IPO back in November 2010, but cancelled due to "unfavorable market conditions".

Being the largest gaming company in the world, with 52 properties in the US, Canada, and Europe, you would think that this IPO would be favorable with the stock market people. However, this is being regarded as a joke and a farce, with one site calling it "The Worst IPO of 2012".

There are a few reasons for this. First, Caesars has a ton of debt, even more than MGM which recently opened the money pit known as City Center. Second, they have no properties in Asia, specifically Macau which is the largest gaming market in the world. Finally, Caesars is only releasing 1.4% of their company in this IPO, which will raise $18 million. What's the point of such a tiny offering, especially with the mountain of debt they own?

I have recently gotten into the stock market, and I agree that this IPO doesn't look good on the surface. But the poker player in me has been looking forward to this for a while. As I've already wrote, I think there is a 60% chance of online poker being up and running in Nevada by the end of 2012. When that happens, WSOPonline.com (or whatever Caesars will use) will be the biggest brand on Web. Once Nevada starts the online poker ball rolling, other states will follow, and Caesars continue to be the dominant site in the US.

I expect the Caesars stock (CZR) to drop, due to lack of interest on Wall Street. I will happily start to buy at $8/share, and treat this a speculation stock. Hopefully I am correct about Nevada online poker, and will reap the rewards both on the felt and in the market.

UPDATE (10pm):

Well, I certainly nailed that one. There was plenty of interest in the IPO, as the stock quickly shot up the charts. It reached a high point of $17.90 in the morning, but leveled off in the afternoon finishing at $15.39.

So does this mean I'm gonna buy at this price?

Nope. I believe in the "Buy Low, Sell High" philosophy, and not "Buy High, Sell Slightly Higher." I'm gonna wait a couple of days to see what happens with the stock before I set my Buy price, just like I have done with all the stocks on my list. I expect it will slowly drop, as the coolness of the IPO calms down, and people realize just how bad Caesars' debt problem is.