What is sending the PointsBet share price 6% lower today?

What’s happened to PointsBet shares?

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An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls

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Key points

  • PointsBet shares sink 6.14% to $2.675 during mid-afternoon trade 
  • The company didn't release any market specific announcements, however its shares are being dragged down by the weakness in the ASX tech sector 
  • A number of short-sellers are still holding a large number of PointsBet shares in short positions 

The PointsBet Holdings Ltd (ASX: PBH) share price is having a shocker of a day despite no company announcements.

At the time of writing, the sports betting company’s shares are down 6.14% to $2.675.

Let’s take a look at what’s dragging down the former market darling.

PointsBet shares sink amid ASX tech sector sell-off

Investors are offloading the PointsBet share price despite the broader market ticking up a notch across the ASX.

However, the S&P/ASX All Technology (ASX: XTX) sector in which PointsBet falls under is shedding 0.29% to 2,033.5 points.

It appears the benchmark index for Australian technology-orientated companies is taking a breather after recording 4 consecutive sessions of gains.

In addition, PointsBet shares continue to be targeted by short-sellers, propping up consistently within the top part of the list.

Short-selling is a common trading strategy that aims to profit from the fall in the price of a security. The goal is for an investor to borrow shares and sell the shares, and buy them back at a lower price for a profit.

Last week, the Australian Securities & Investments Commission (ASIC) released its short position report revealing the level of short interest within companies.

As at 1 July, PointsBet had 6.20% of its shares being shorted by investors.

Given sizable short positions being taken up, it appears investors believe the company’s shares will continue to fall.

PointsBet share price snapshot

Adding to its steep declines, the PointsBet share price has tumbled by almost 80% over the last 12 months.

These losses have come in 2022 as investor express their concerns about the company’s extreme valuation and high marketing costs.

Year to date, PointsBet shares are down 62%.

Based on today’s price, the company commands a market capitalisation of roughly $834.95 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in 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 Scott Phillips.

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