Why the PointsBet (ASX:PBH) share price is crashing 12% lower on Tuesday

PointsBet shares are tumbling on Tuesday…

| More on:
gambling asx share price fall represented by woman in soccer had looking frustrated at tablet screen

Image source: Getty Images

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 returned from its trading halt and is tumbling lower.

In early trade, the sports betting company's shares are down 12% to $9.93.

Why is the PointsBet share price tumbling?

The catalyst for the weakness in the PointsBet share price on Tuesday has been the completion of its institutional entitlement offer.

According to the release, the company has raised $81 million via a 1 for 9 fully underwritten pro rata accelerated renounceable entitlement offer. This offer was strongly supported by Australian and international institutional shareholders.

These funds were raised at a 29% discount of $8.00 per share. In addition, the institutional shortfall bookbuild then cleared at $10.00, which is a 25% premium to the entitlement offer price.

In respect to the latter, the eligible institutional shareholders who did not elect to take up their entitlements (and ineligible institutional shareholders) will receive $2.00 for each entitlement sold through the auction.

What's next?

The company has already completed its institutional placement to raise a further $215.1 million at $10.00 per new PointsBet share.

It will now undertake a retail entitlement offer at $8.00 per share. This will bring the total raised to $400 million.

Why is PointsBet raising funds?

PointsBet is raising funds to support its North American marketing and client acquisition, technology and product development, US market access and government licensing fees, and its investment in talent and the scaling of its operations.

PointsBet's Managing Director and Group CEO, Sam Swanell, commented: "Since inception, PointsBet's Board and management have been working to establish and consolidate the key building blocks that have put us in the strong position we are today to pursue the expansion of the North American sports betting and iGaming opportunity."

"Today, in addition to our profitable Australian business, we have live operations in 6 US States with iGaming live in two of these states. By December 2022 we plan to be live in at least 19 North American states or provinces. The North American sports betting and iGaming market could be a US$54bn revenue opportunity by 2033 and our strategy is to continue to invest to become a top 5 player in this market, targeting a 10% market share in all key North American jurisdictions. The Capital Raising will position PointsBet to execute this strategy," he added.

Despite today's decline, the PointsBet share price is still up more than 100% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended 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.

More on Consumer Staples & Discretionary Shares

Happy couple doing grocery shopping together.
Consumer Staples & Discretionary Shares

What is Bell Potter saying about the Woolworths share price?

Is it recommending Woolies as a buy?

Read more »

A man cheers after winning computer game while woman sitting next to him looks upset.
Earnings Results

2 high-flying ASX 200 gaming shares splitting ways today

Which gaming giant is winning the admiration of investors amid results?

Read more »

Two brokers analysing stocks.
Broker Notes

Don't miss these changes to broker ratings on ASX shares

The verdicts are in.

Read more »

a man stands with his arms folded in front of banks of unused poker machines in a darkened gaming room.
Consumer Staples & Discretionary Shares

Up 59% in 2024, why this ASX 200 stock is making noise today

Big money for this company's free offering.

Read more »

A company manager presents the ASX company earnings report to shareholders at an AGM.
Consumer Staples & Discretionary Shares

Why today is a big day for Coles shares

And not because of any outsized share price moves.

Read more »

A child pulls a very sad crying face sitting in the child seat of a supermarket trolley in a supermarket aisle lined with grocery items.
Consumer Staples & Discretionary Shares

Why did the Woolworths share price just hit a new 4-year low?

Pressures continue for the supermarket giant.

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just hit an all-time low following a profit warning

Higher costs and flat sales are weighing on this blue-chip stock.

Read more »

Family shopping for groceries
Consumer Staples & Discretionary Shares

This expert says Coles shares are a discounted bargain buy right now

The supermarket business is worth putting in the stock trolley to buy.

Read more »