On 20 July Crikey ran this insightful piece by an investment banker on the Tattersall’s share price and the likely future performance of the stock.

Since that time, both the stock price and the mainstream media have started to catch up with the story. Today’s Streetalk column in The AFR features a detailed breakdown of the Goldman Sachs-JB Were valuation of Tattersall’s (which was released yesterday) of $2.65 and highlights the uncertainty in this stock. Note that this valuation compares with the $1.90-$2.42 valuations that we referenced in the previous article – all well below the institutional bookbuild price of $3.10 and the price at the time of our previous article (around $3.30).

Today’s news has seen the stock price dip to fresh lows – trading as low as $3.08 this morning, the first time it has traded below the institutional bookbuild price. At the same time, a host of retail brokers (we’ve seen comment from Southern Cross Equities (who can’t even spell Tattersall’s, preferring “Tattersal’s”) and Tolhurst Noall) have been pushing their private clients into the stock, based simply on PE multiple and dividend yield analysis. But this analysis simply doesn’t hold up for a stock with so much licence risk only a few years out.

We stand by our previous comment on Tattersall’s – on fundamentals, this is a stock with further to fall. However, for investors the pain might be delayed in the short term. Tattersall’s now looks likely to get index membership in September 2005. This may drive some share price appreciation, but looking further out it is difficult to see any bright spots on the horizon for Tattersall’s.

Stephen Mayne writes:Silly me for buying 160 Tattersall’s shares at $3.15 a pop on Monday. Still, I’d be delighted if the company went broke and less misery was deluged on its tens of thousands of Victorian poker machine addicts.