ASX corporate bookmaker Pointsbet Holdings Ltd (ASX: PBH) has been expanding at breakneck speed recently. Just look at the announcements Pointsbet has released to the market this year alone.
Towards the end of January, Pointsbet announced that it had obtained approvals to launch operations in Michigan. Just days later, the company signed basketball legend Shaquille O'Neal as its Australian brand ambassador.
Two weeks later, it announced that it was entering into a strategic marketing and betting partnership with the American National Hockey League (NHL). A month after that, Pointsbet revealed that it was acquiring Dublin-based risk management company Banach Technology Limited. And then, just last Friday, Poinstbet announced that it had been granted access to online sports betting markets in Pennsylvania and Mississippi.
Oh, and in the midst of this flurry of activity, Pointsbet also released its first-half FY21 financial results, in which it reported a 174% jump in revenue versus the prior comparative period (to a little over $75 million).
What about the losses?
However, the results also revealed that signing all these contracts doesn't come cheap – losses for the half-year ended 31 December blew out to almost $86 million, up from $32.3 million a year ago.
First-half FY21 sales and marketing expenses were triple what they were for the first-half FY20, as the company invested in a series of growth initiatives. However, personnel, technology, and administration expenses were also all up substantially too.
Currently, Poinstbet is happy to absorb these losses. It still ended the year with a strong balance sheet thanks to a massive capital raise completed in September injected an additional $353.2 million in cash into the company. Cash and equivalents were almost $390 million at 31 December 2020, and the company's net asset position was $513.2 million.
This rapid growth trajectory has also translated into some incredible share price movements. Since listing on the ASX back in June 2019 at a price of just $2, Pointsbet shares have skyrocketed over 570% to $13.46 as at the time of writing.
This includes gains of more than 160% made in 2020 – a pandemic year in which many major sporting leagues and key events worldwide were either postponed, cancelled, or modified.
About the Pointsbet share price
Compared to its peers, Poinstbet was a bona fide market darling of the COVID-19 era. Shares in fellow bookmaker Tabcorp Holdings Limited (ASX: TAH) ended 2020 down about 10% after never really recovering from a massive selloff during the March 2020 crash. It is only just edging up towards pre-COVID prices now.
Pointsbet's aggressive growth strategy – targeting the US market in particular – has delivered some impressive shareholder returns. Just be sure to keep an eye on those ballooning marketing costs.
The Pointsbet share price is trading at $13.40 at the time of writing. Pointbet shares are up 13% year-to-date and have increased by 609% over the past 12 months.
