The Pointsbet Holdings Ltd (ASX: PBH) share price has continued a rally that started in August, rising by 2.6% in today's trading thus far. On 28 August, the company announced a transformational 5 year partnership with NBCUniversal, a subsidiary of Comcast Corporation (NASDAQ: CMCSA). Since that date, the Pointsbet share price has rocketed up by more than 55%, placing it up by 138% in year-to-date trading.
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What's driving the Pointsbet share price?
The Pointsbet share price grew after the company became the official sports betting partner of NBC Sports in the United States. This provided it with access to over 184 million viewers which is the largest sports audience of any US media company.
As part of the deal, Pointsbet has committed to a total marketing spend of US$393 million in progressively increasing amounts, as well as incentives payable to NBCUniversal for customer referrals. Commitment to the alignment is also underscored by NBCUniversal receiving a 4.9% shareholding in Pointsbet as well as 66.88 million options maturing in five years, conditional on shareholder approval. Pointsbet only floated on the ASX in 2019.
Comments on the deal
JPMorgan analysts believe the deal may have a negative impact on the Pointsbet share price. In a client note, the analysts said:
Media partnerships require balance sheet, time and expertise. Rarely do these start frictionless, and often they benefit the guaranteed media partner more than the paying operator.
Nonetheless, investors streamed in for Pointsbet's $353 million raising on 8 September, with funds intended to be used for marketing and business development.
PointsBet Managing Director and Group CEO, Sam Swanell, said at the time;
NBC Sports, an iconic brand and holder of the largest sports audience in the US, brings significant credibility and trust to PointsBet's operations. Through the NBC Sports partnership, PointsBet gains access to market-leading broadcast assets which span 184 million viewers and digital assets which span 60 million monthly active users.
These assets will act as the cornerstone of our marketing strategy and combined with our in-house technology and products, as well as our talented and experienced team, will deliver outstanding client acquisition and retention efficiency as we scale rapidly over the next five years. NBCUniversal's decision to take an equity stake in PointsBet illustrates the alignment of our strategies, the trust across teams, and our shared belief that the US gaming market is a once in a lifetime opportunity.
Pointsbet remains a favorite of retail investors, in fact Morgan Stanley has found it is only behind Myer Holdings Ltd (ASX: MYR) and Ardent Leisure Group Ltd (ASX: ALG) with regards to its proportion of retail online trading. Only time will tell whether, as the company starts to report revenues from the US under this arrangement, it continues to have a positive impact on the Pointsbet share price.
