Why the PointsBet share price opened 52% higher on Friday
Following a flurry of announcements – including a ‘game changing’ partnership with NBC Sports – we examine what drove the PointsBet share price higher on Friday, 28 August 2020.
PointsBet (PBH) share price surges on NBC partnership announcement
It was a busy day for online bookmaker PointsBet Holdings (PBH) with the company reporting its full-year FY20 results, a $300 million capital raise and a five year media partnership with NBC Sports.
The investor response to all this news was a frenzied one – with the stock opening 52% higher – at $11.41 per share. For reference, PointsBet closed out Thursday's session at $7.50 per share.
It looks to be the partnership with NBC which attracted the most attention – with analysts from Ord Minnett describing it as a game changer.
‘Here is a significant opportunity for PointsBet to take a significant leg-up in brand awareness, and ultimately market penetration, assisted by the market leading presence of NBCUniversal,’ the broker said.
Ord Minnett is currently reviewing its rating and price target on PBH.
First, unpacking PointsBet’s full-year results, on a year over year and statutory basis, the company reported:
- Turnover of $321.1 million, up 316.8%
- Total revenues of $75.2 million, up 193%
- Statutory earnings (EBITDA) of negative $39.7 million, down 7%
- A full-year loss of $415 million, up 1%
Second, the sports betting company revealed that it was planning to undertake a $300 million capital raise.
The company said it would launch this raise after the market close, on Wednesday, 2 September, with it being specified that the raise 'is likely to be structured as an accelerated renounceable pro rata entitlement offer and a placement.'
Analysts from Ord Minnett described the delay in the raise as ‘unusual’.
While the offer price of both components of the raise have yet to be determined, the company noted it expects the entitlement offer 'ratio will be 1 new share for every 6.5 shares held on the record date.’
Finally, PointsBet today announced that it had entered into a five year partnership with NBC Sports to become the Official Sports Betting Partner of NBC Sports across the United States.
As part of this partnership, it was revealed that NBC would take a significant – 4.9% stake in PBH as well as gain 66.88 million options (maturing in five years) under the deal.
Moreover, as part of this five year partnership, PBH said it has committed to a total marketing spend of US$393 million. In FY20 the company’s total marketing spend came in at $35.4 million.
'Through the NBC Sports partnership, PointsBet gains access to market-leading broadcast assets which span 184 million views and digital assets which span 60 million monthly active users. These assets will act as the cornerstone of our marketing strategy,' invariably assisting the company with its scaling efforts over the medium term, PointsBet's Managing Director and CEO, Sam Swanell, said.
PBH last traded at $11.92 per share.
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