Amaya Stock Downgraded by Moody’s as Insider Trading Allegations Linger

March 25th, 2016 | by Brian Corlisse

Largely in part due to CEO David Baazov’s alleged criminal misconduct and insider trading, Moody’s Investor Services downgraded its Amaya stock rating to “negative” on Thursday. (Image: Marco Campanozzi/La Presse)

Amaya stock is currently listed at $11.71 on the Nasdaq stock exchange, 17.5 percent lower than it was earlier this week. Trading is closed Friday to honor the Christian holiday Good Friday, but when the market reopens on Monday, you might want to take a word of caution before moving all-in on the Canadian company that owns both PokerStars and Full Tilt Poker.

Moody’s Investment Services, a New York City financial analytical company that researches and rates businesses and their creditworthiness, downgraded Amaya’s outlook this week to “negative.”

As PokerSites.com reported on Wednesday, Amaya CEO David Baazov has been named by the Autorité des marchés financiers (AMF), Quebec’s financial regulatory arm, on five counts of insider trading charges.

AMF authorities allege that Baazov distributed confidential information to outside investors leading up to Amaya’s $4.9 billion acquisition of the Rational Group in an attempt to possibly sway investors and manipulate the company’s value. Baazov has publicly denied the allegations and the Amaya independent board has backed its CEO.

No Mood for Amaya

Moody’s revision of Amaya from being listed as “stable” to “negative” signifies that the company now poses a “high credit risk” to potential investors. Though two other individuals and two companies are also being charged by the AMF, it’s Baazov who is primarily responsible for Moody’s downgrading.

In its rating press release, Moody’s said the “charges along with the legal process that follows could negatively affect the execution of the company’s operations and growth strategies, particularly given that Mr. Baazov is significantly involved in the development and execution of Amaya’s business strategies.”

Numerous financial organizations release stock ratings, but not all are worth equal weight. The big three rating agencies, Moody’s, Standard & Poor’s, and Fitch Ratings, have the most direct impact on the markets.

Worse yet for Amaya is that the market tends to react stronger to rating downgrades than rating upgrades.

PokerScout Upgrades

Though Amaya stock will likely falter next week when trading resumes, its PokerStars subsidiary is traveling in a different direction in New Jersey. Coming to a close on its first full official week in the Garden State, PokerStars New Jersey has as expected quickly gained a considerable share of the isolated market.

Per the latest data from PokerScout, PokerStars is averaging 140 players for its seven-day average. The PokerStars average trails the WSOP/888 closely by just 20 players and surpasses Party Borgata’s 100-person tally.

And when it comes to 24-hour peaks, well, PokerStars is reaching new heights. The network topped out at 440 cash game players this week, more than any other online poker destination in the state.

Next week will provide additional insight on the network’s impact on New Jersey and how the rake increase commencing on Monday will affect traffic.

PokerStars communications boss Eric Hollreiser announced the changes earlier this week, but emphasized that even after the hike the room will still come with the lowest overall pricing of any major iPoker operator.