With plans in place to relax coronavirus restrictions across all the states and territories, things are feeling decidedly more optimistic than they were a few weeks ago. Australians are starting to get their first glimpse at what life will be like in a (slightly) less socially distanced world. Pubs are reopening, and both the AFL and NRL have announced that their seasons will resume within the next few weeks.
It's that last development that is a scintillating prospect for online bookmakers that have suffered in a world essentially devoid of sport. So, here are some ASX shares to keep an eye on.
Tabcorp Holdings Limited (ASX: TAH)
Tabcorp shares had been trading more or less sideways for years prior to the COVID-19 pandemic, hovering just under $5, but rarely pushing above that psychological price barrier. However, they rarely threatened to fall below $4 either and paid out a dependable fully franked dividend – making Tabcorp a nice little earner for long-term shareholders.
However, that all changed when the coronavirus hit. Tabcorp shares plunged below $3 for the first time in years, falling as low as $2.09 by late-March. And while they have managed to recover since then, they are still well short of their pre-coronavirus highs.
The difficulty for Tabcorp – and a potential reason why its share price hasn't rebounded as strongly as its shareholders may have hoped – is its large retail presence. According to its most recent annual report, Tabcorp operated in over 9,000 venues – all of which would have been forced to close during the pandemic.
Pointsbet Holdings Ltd (ASX: PBH)
ASX corporate bookmaker Pointsbet was shaping up as one of the best growth shares on the ASX prior to the COVID-19 pandemic. Investors seemed particularly enamoured with its aggressive expansion strategy targeting the US market.
After listing on the ASX for $2 in June 2019, Pointsbet shares raced to a high of $6.65 by January 2020. But the company's shares plunged at the height of the coronavirus panic, plummeting all the way down to just $1.10 by mid-March.
Since then, the Pointsbet share price has rallied strongly and is within striking distance of $5 as at the time of writing. In its March quarter update, Pointsbet noted lower growth in active customers due to the suspension of major sporting codes, although revenue from Australian racing remained largely unaffected.
Should you invest?
The return of the major Australian sporting codes presents some welcome good news for these 2 major ASX bookmakers. But the full benefit won't be felt until the September quarter, meaning that investors may still have to weather some short-term volatility.
However, both companies also present a different set of risks. Tabcorp's extensive retail network has been a heavy burden during these lockdowns. But the uncertainty around US sport in the near-term is a concern for Pointsbet.
Neither bookmaker is a sure bet. But they are still ones to watch as global sporting codes try to resume in a post-coronavirus environment.
