The PointsBet Holdings Ltd (ASX: PBH) share price is down another 9% on Friday to $7.85 at the time of writing.
It was even worse in earlier trading with the PointsBet share price falling to a 12-month low of $7.73.
Shares in the sports betting darling have tumbled 24.4% in the past two trading sessions. This follows the company releasing its first-quarter trading update on Thursday morning.
Was the first quarter update really that bad?
The first-quarter update reads well at face value, with strong growth across all key operating metrics.
Group turnover increased 42% on the prior corresponding period (pcp) to $979.9 million.
The gross win margin (dollar amount received from clients' losing bets less the dollar amount paid to clients' winning bets, excluding promotional costs) improved to 11.9% from 10.2%.
Overall net win lifted 76% to $67.3 million (net win includes promotional costs).
The number of cash active clients continued its upwards momentum, bolstered by a 367% increase in US clients to 185,880.
From a financial perspective, however, PointsBet continued to burn through cash worth $38.1 million in the September quarter.
PointsBet has followed a "spend money to make money" narrative. Its FY21 results highlighted a 159% increase in revenue to $194.7 million, fuelled by a 314% increase in losses to $164.3 million.
Since its initial public offering in June 2019, PointsBet's valuation has ballooned to $2.7 billion, even after this week's sell-off.
During this time, the company has initiated three capital raisings to help fund its US growth plans.
As the company continues to burn through cash to capture market share in the lucrative US sports betting market, investors might finally be asking, "What's the end game?".
Another factor potentially weighing on the PointsBet share price is its failure to grab an Arizona licence.
According to the company's earnings call, PointsBet CEO Sam Swanell said:
We thought we had a license and it was subsequently not – our partner was subsequently not included in the list of licenses that have been handed out.
PointsBet will be in Arizona. Any state that has 20 available licenses, PointsBet will get into that state. The question – the big question is when."
An ugly year for the PointsBet share price
The PointsBet share price rallied almost 50% between January and mid-February, briefly hitting an all-time high of $17.60.
But things have only gone downhill from there.
Whether it's the company's immense cash burn, capital raising overhang or investors losing interest in its US growth story, PointsBet is now down 31% year-to-date.
