Could this overnight news lift the PointsBet (ASX:PBH) share price?

Could this piece of overnight news from Draftkings Inc (NASDAQ: DKNG) help push the PointsBet Holdings Ltd (ASX: PBH) share price higher?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The PointsBet Holdings Ltd (ASX: PBH) share price has edged marginally higher today after its US rivals, DraftKings Inc (NASDAQ: DKNG), announced an upgrade to the projected size of the US sports betting market. 

What did Draftkings announce?

DraftKings held its virtual investor day presentation last night, where the company raised its long-term financial targets and upgraded its forecasts for the US sports betting market. The company cited positive legalisation trends to arrive at a new US$67 billion projection for the sports betting industry. It also noted that domestic online sports wagering alone could be worth US$22 billion or more, assuming all states legalise sports betting. The company did acknowledge that full legalisation could be ambitious because getting anti-gambling states such as Hawaii and Utah is likely to be difficult. 

This compares to commentary from PointsBet back in August 2020, which cites Morgan Stanley and JP Morgan estimating the US iGaming and Sports betting sector to be worth a combined US$12 billion by 2025. 

Another interesting point from its investor day was its commentary around Canada. Canada recently approved single-game sports betting and is estimated to be a $5 billion to $8 billion sports betting opportunity. 

Why this could be good for the PointsBet share price 

Despite being competitors and fighting each other for market share, DraftKings' positive commentary regarding broader market conditions is likely to be good news for the PointsBet share price. 

PointsBet is currently operational in 5 US states including New Jersey, Illinois, Indiana, Iowa and Colorado. The company has also made plans to enter the iGaming sector with an in-house platform in the works for an inaugural launch in Michigan in 2H FY21, followed by New Jersey.

In its half-year results presentation, Pointsbet hinted at the potential opportunity to launch New York, a state with one of the largest estimated sports betting revenues, and Canada. 

Why the PointsBet share price is slumping this month

The PointsBet share price has slumped more than 20% in the last month. This brings its year-to-date returns to just 8% compared to its peak year-to-rate returns of almost 50%. 

PointsBet might have been caught in the recent tech and growth driven selloff due to rising bond yields. This has seen many leading ASX 200 shares, such as Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO), become some of the worst-performing shares this month. 

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of Xero. 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.

More on Share Market News

Contented looking man leans back in his chair at his desk and smiles.
Share Market News

5 things to watch on the ASX 200 on Thursday

Will the market continue to rise? Let's find out.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Broker Notes

The smartest Australian stocks to buy with $250 right now

$250 to invest? Check out these stocks that brokers rate as buys.

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Share Gainers

2 ASX All Ords stocks that would already have more than doubled your money this year

These ASX All Ords stocks have gained 126% and 145% year to date. But how?

Read more »

A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.
Broker Notes

1 magnificent Aussie stock down 23% to buy and hold forever

Let's see why this could be a top share to buy while it is down.

Read more »

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was an historic day for the ASX, with the market setting a new record.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

Bell Potter says this ASX 200 stock can rise 100%+

Let's see which stock the broker is tipping as a buy to clients.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Broker Notes

Macquarie tips 28% upside for this ASX All Ords tech stock

Let's see what the broker is saying about this growth stock.

Read more »