The PointsBet Holdings Ltd (ASX: PBH) share price doubled in a single day after the announcement of its FY20 results and game-changing media partnership with NBCUniversal. But as the sports betting scene in the US continues to develop, why has the PointsBet share price gone nowhere since August?
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Time needed to digest run up?
Without further news, a company's share price likely needs to take a breather after such a significant move up.
Zip Co Ltd (ASX: Z1P), for example, ran more than 60% in August after the announcement of its partnership with eBay and FY20 results. However, as the company emptied the clip of good news, its share price ran out of momentum to give up most of its August gains in the following months.
In the case of the PointsBet share price, not only did it jump 100% in a single day but it also announced a $353 million capital raising at an offer price of $6.50 per share a few days later. The significant move up combined with the share price dilution from the capital raising may have capped its ability to push higher.
The recent rotation from tech and growth to value and cyclical sectors is possibly another force acting as a drag on the PointsBet share price. Leading S&P/ASX 200 Index (ASX: XJO) tech shares across the board including Afterpay Ltd (ASX: APT) have struggled to outperform the broader market in November.
PointsBet timeline already announced
PointsBet's plans in the US have already been announced in its previous FY20 results. This includes its plans to launch in Colorado in November 2020 and Michigan in the third quarter of FY21. And also the launch of its iGaming product in Michigan in Q3 FY21 and New Jersey in the second half of FY21.
The company announced its Colorado launch on 17 November. This represents its fifth online sportsbook operation in the US. The Colorado market represents an estimated revenue opportunity of $296 million by FY23. This compares to the FY23 revenue opportunity of $784 million in Illinois, $555 million in New Jersey, $317 million in Indiana and $159 million in Iowa. Pointsbet currently maintains a market share of 6.5% in New Jersey and 3.2% in Indiana as of the first quarter of FY21.
