PointsBet Share Price Down on Partnership with Austin Football Club (ASX:PBH)

The PointsBet Holdings Ltd’s [ASX:PBHshare price slipped after a partnership with Major League Soccer club Austin FC to leverage opportunities in Texas.

PBH shares are currently trading at $9.42 per share, a drop of 1.88% at time of writing.

ASX PBH - PointsBet Share Price ChartSource: Tradingview.com

PointsBet Partners with Austin FC

The company’s wholly owned subsidiary PointsBet Texas LLC entered into an exclusive agreement with Austin FC, which appointed PointsBet as AFC’s exclusive sportsbook partner.

PointsBet executed a market access agreement with AFC’s home stadium — subject to enabling legislation and licensure.

This agreement involves Austin FC’s Q2 Stadium and PointsBet partnering to pursue a ‘first skin’ license to operate online and retail sports betting and iGaming in Texas via the company’s mobile app and website platforms.

The agreement will run for 10 years from the date PointsBet first takes a bet in Texas. However, the duration is dependent on enabling legislation/regulations.

Through this strategic alignment, PBH will receive permanent onsite recognition at Q2 Stadium as the Ausitn FC’s Exclusive and Official Sports Betting Partner.

Moreover, PointsBet will also earn full usage of Austin FC IP, marks, and logos.

It is expected that legislation will be introduced in forthcoming sessions seeking to permit sports betting to be offered by racetracks and professional sporting teams both online and in person at racetracks and sporting stadiums.

PointsBet will pay AFC a sponsorship fee — split between pre-legalisation and post-legalisation of sports betting.

The company will also pay Q2 Stadium a market access fee as well as a portion of Net Gaming Revenues derived from any future sportsbook and iGaming operations in Texas.

Johnny Aitken, CEO of PointsBet USA, said:

We are excited to join up with Austin FC in their inaugural season as a Founding Partner.

Texas has the potential to be fantastic future market for PointsBet and given the shared values and vision between us and Austin FC we are excited to work together on bringing unforgettable experiences to the fans of Austin FC.

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PBH outlook

Today’s update is in line with PointsBet’s current growth and expansion strategy.

The wagering sector is quickly expanding in the US so securing deals like the one announced today can give PBH first-mover advantages.

PointsBet noted:

Texas has a growing population of over 29 million.

Austin FC headquarters and Q2 Stadium is in the city of Austin.

As the first and only pro sports team located in Austin, the partnership will provide for the only retail sports wagering presence in Austin which is amongst the fastest growing cities in the United States.

However, the muted market reaction to the partnership could suggest the market is no longer surprised by deals of this kind.

PBH’s growth potential is factored in the current price.

So it could be investors are now shifting their attention to PBH’s ability to translate all its partnership deals and marketing expenditure into profit.

When will the improving top line lead to a healthy bottom line?

PBH’s reported revenue jumped 159% to $194.7 million in FY21 but came at a hefty price.

PointsBet posted a 313% increase in losses from $39.7 million in FY20 to $164.3 million in FY21.

Now, PBH has been a high-flying growth stock garnering plenty of attention.

Attention can limit mispricing opportunities…that’s why many are attracted to the small-caps sector, with its unheralded and underreported gems.

Seven such small-cap gems were recently profiled by our guru Murray Dawes in a detailed briefing.

If you want to get your hands on it and have a read, you can do so here.

Regards,

Kiryll Prakapenka,

For Money Morning

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Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


Money Morning Australia