PointsBet directors top up their holdings. Should you buy?

PointsBet Holdings Ltd (ASX: PBH) directors load up on its shares, is this a bullish sign for the company?

| More on:
a woman

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

Corporate bookmaker PointsBet Holdings Ltd (ASX: PBH) has recently announced a $122.1 million capital raising to support its US growth opportunity. The company has also witnessed a change of director's interest notice with 4 directors acquiring a collective $2.3 million worth of shares.

Is this a buying opportunity?

The company has just completed its $85.9 million oversubscribed institutional placement and pending the completion of its $36.1 million retail offer. The institutional offer was heavily oversubscribed with a shortfall bookbuild clearing price of $4.00, representing an $0.80 premium to the entitlement offer price of $3.20.

While an oversubscribed capital raising is typically a good sign, the sheer size of the raise could cap any potential share price gains in the short-medium term. Especially taking into consideration that the company just raised $75 million for its IPO 5 months ago.

However, the progressive legalisation of sports betting in America is a truly significant opportunity. In an article from The Age, PointsBet CEO Sam Swanell said that the US sports betting market could be worth $5 billion by 2023 and that his company could realistically get a 10% slice of that. He also said that the latest capital raising will give the company a "decent runway" but might need to tap investors again depending on when other states – especially larger markets like Texas, California and New York – come into play.

PointsBet has demonstrated a strong performance to date, capturing an almost 7% share of New Jersey's online sports betting market in the first quarter of this financial year. The company should continue to build on its market share momentum in both current and emerging markets.

Colorado legalises sports betting

US states continue to open up to legal sports betting both in a casino retail setting and via online/mobile sportsbooks. It was just last week that Colorado legalised sports betting, which will commence in May 2020. The licensing fee for all master licensees and sports betting operators is US$125,000 per license and the state is anticipating 40 license applications right out of the gate. PointsBet has both online and retail access to Colorado.

Foolish takeaway

The US sports betting market is full of opportunities and PointsBet is going hard to acquire as much market share as possible. The company will continue to burn cash in its US business development, marketing and client acquisition activities as it goes up against long-standing fantasy league operators DraftKings and FanDuel.

Ultimately, this is an exciting space to be in and PointsBet is positioned front and centre to capitalise on the opportunity.

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ⏸️ Shares to Watch

asx share price rebound represented by wooden blocks spelling rebound with coins on top
⏸️ Shares to Watch

Could the Zip (ASX:Z1P) share price make a comeback in 2021? 

The Zip (ASX: Z1P) share price struggled to outperform in the second half of 2020. Could 2021 be a better…

Read more »

⏸️ Shares to Watch

What next for the a2 Milk (ASX:A2M) share price?

Could you call the A2 Milk Company Ltd (ASX: A2M) share price a cheap growth stock after it slumped to…

Read more »

⏸️ Shares to Watch

What's in store for the Afterpay (ASX:APT) share price in 2021? 

The Afterpay (ASX: APT) share price has surged more than 275% in 2020. Here's a little of what investors can…

Read more »

wondering about asx share price represented by man surrounded by question marks
⏸️ Shares to Watch

Is the Zip (ASX:Z1P) share price a buy yet?

The Zip Co Ltd (ASX: Z1P) share price continues to underperform despite an exciting capital raising. Could it finally be…

Read more »

questioning whether asx share price is a buy represented by man in red shirt scratching his head
⏸️ Shares to Watch

Should you buy the Appen (ASX:APX) share price dip?

Could the Appen Ltd (ASX: APX) share price be a buying opportunity after its recent selloff? We take a look…

Read more »

Share Fallers

Why this broker thinks it's time to buy Qantas (ASX:QAN) shares

As state borders re-open to domestic tourism, this broker thinks it could be time to start buying Qantas Airways Limited…

Read more »

wondering about asx share price represented by man surrounded by question marks
⏸️ Shares to Watch

Could this be why the Zip (ASX:Z1P) share price is underperforming?

Could this be why the Zip Co Ltd (ASX: Z1P) share price is down 50% from its August highs and…

Read more »

Hands grabbing for high rung on a ladder pointing to the sky
⏸️ Shares to Watch

The Rhipe (ASX:RHP) share price has jumped 8% today. Here's why.

The Rhipe Ltd (ASX: RHP) share price has popped 8.59% after announcing its first quarter FY21 update. Here's the run…

Read more »