DigiPlus meltdown as price bounces off the floor

DigiPlus [PLUS 38.75, down 13.9%; 511% avgVol] [link] was asked to comment on its unusual share price movement yesterday after PLUS shares touched the price floor (down 30% on the day) just before 2 p.m. The price recovered significantly enough for PLUS to end the day down nearly 14%. PLUS’s reply to the inquiry was filed well after the markets were closed. In it, PLUS attributes the dramatic crash to “market speculation” about the two bills filed that seek to regulate the online gambling industry, which PLUS notes are “still in the early stages of the legislative process”. PLUS sought to reassure investors by saying that it “remains fully operational” and “confident in the long-term growth potential of the Company.”

MB bottom-line: This is one of those “head to the comments section” kind of days. There was some speculation as to the number of PLUS’s users that would be eliminated by the proposed P10,000 minimum deposit rule, and as pointed out by Twitter user Irving Chin [link], just two days ago, Brazil’s government recently hiked its take from online gambling activities by 50%, from 12% to 18%. This appears to have caught Brazil’s gaming industry off guard, with the government claiming the abrupt policy change is necessary for it to deal with a looming budget deficit. PLUS is down almost 50% from its very recent all-time high. Are the actions of our own Senators just another example of the government trying to pry away a piece of a hot commodity to make it all go away, or is this regulatory action a real attempt by lawmakers to meaningfully curtail the blooming e-gaming sector?

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