Pointsbet Holdings Ltd (ASX: PBH) shares have slumped almost 8% in morning trade. The falling Pointsbet share price has come despite no market sensitive announcements out of the company or significant news regarding the sports betting sector.
Pointsbet peers unchanged
Pointbet’s gambling and sports betting peers have been largely unchanged today with the Tabcorp Holdings Limited (ASX: TAH) share price down just 0.25% and United States-listed bookmaker, Draftkings Inc (NASDAQ: DKNG) closing flat last Friday. This is a far cry from the significant drop seen in the Pointsbet share price this morning.
Sports betting continues to develop in the US
The US sports betting scene continues to develop in favour of bookmakers. States across the board continue to set monthly records for sports betting handles. Indiana set a third consecutive record month after its gaming commission reported $251.4 million wagered in November. Pointsbet re-launched its Indiana operations back in July 2020 with a first quarter FY21 turnover of $14.3 million in the state.
The Pointsbet share price bigger picture
Despite today’s falls, the Pointsbet share price has still surged more than 500% since its IPO back in June 2019. Even after the initial COVID-19 selloff in March, the Pointsbet share price is still up more than 150% year to date.
The company announced a significant media partnership with NBCUniversal back in August. This deal is estimated to be worth at least $500 million as Pointsbet has committed to spend US$393 million in progressively increasing amounts over the 5-year media partnership, together with incentives payable to NBCUniversal for customer referrals. NBCUniversal has also put skin in the game with a 4.9% shareholding of Pointsbet.
Pointsbet initiated a A$303 million capital raising at $6.50 per share to fund the deal. The entitlement offer represented a significant 48.9% discount to the closing price of $12.73 on Wednesday 2 September 2020. Shareholders also received one new option for every two shares issued under the entitlement offer. These new options are exercisable at $13.00 and expire on 30 September 2022. As a result of its capital raising, the company’s corporate cash balance sat at $436.5 million as at 30 September 2020.
Looking ahead
Pointsbet successfully launched in Colorado in November this year and plans to launch in Michigan in the third quarter of FY21. Furthermore, the company also plans to debut its iGaming product in Michigan in the same period and in New Jersey the second half of FY21.
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Returns as of 6th October 2020
Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
