As this crazy year draws to a close, it is worth reflecting on some of the best performing shares on the ASX.
There have been some surprising success stories to come out of 2020: little-known tech companies like Nitro Software Ltd (ASX: NTO) and Megaport Ltd (ASX: MP1) have lit up the market. But few companies have delivered the same level of shareholder returns as that of corporate bookmaker Pointsbet Holdings Ltd (ASX: PBH).
Prior to the outbreak of COVID-19, 2020 had been shaping up as a banner year for Pointsbet. Its strategy to target the expanding American gambling market had been delivering some tangible success. Pointsbet had been an early mover in many of the US states that were beginning to relax their restrictions surrounding online sports betting. According to its first half FY20 results, Pointsbet had gained access to a sports betting market worth $5.2 billion in the US alone.
The success of the company's strategy was reflected in the Pointsbet share price. After listing for $2 in June of last year, Pointsbet shares surged to a high of $6.65 by mid-January, and looked set to go absolutely ballistic in 2020.
But then coronavirus happened.
The impact on Pointsbet's business was particularly devastating. Sports leagues across the world came to a grinding halt. With almost nothing for its clients to bet on, it looked like the company's revenues were drying up. The Pointsbet share price was savaged in the March market crash, falling as low as $1.10.
Despite the risks posed to Pointsbet's business, the company continued to follow through on its expansion plans in the United States. Over the last few months, the company has launched operations in the US states of Illinois and Colorado, and signed a new 5 year exclusive partnership with US media giant NBC Universal.
Pointsbet share price game changer
The NBC Universal deal was particularly well received by the market, with the Pointsbet share price skyrocketing close to 90% on the day of the announcement. And no wonder, NBC Sports has the largest audience of any sports media organisation in the US and its broadcast network reaches every TV household in the country.
Pointsbet will now have its brand integrated across NBC Sport's portfolio of sports-focused cable networks, streaming platforms, and other sports digital media. This includes providing betting odds in free-to-play games and fantasy leagues.
The deal with NBC also gives Pointsbet access to Telemundo, a leading Hispanic media company in the US. Pointsbet has tailored its product to specifically address the Hispanic population, and is one of only two sports betting applications in America to offer full Spanish language functionality.
Cashed up
Pointsbet took advantage of the positive investor sentiment generated through the NBC deal and successfully raised over $350 million from both institutional and retail investors. According to its first quarter FY21 investor presentation, Pointsbet now has over $430 million in total corporate cash and cash equivalents on its balance sheet.
The future for Pointsbet is still hard to determine. Despite the prospect of a major coronavirus vaccine rollout buoying equity markets globally, the worsening situation in the US may continue to stifle economic growth there for months to come.
However, the company has at least proven itself to be a resilient operator throughout the COVID-19 crisis. And its ability to execute on its expansion plans despite the market headwinds has lifted the Pointsbet share price to new highs in 2020.
