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Down 9%, the PointsBet (ASX:PBH) share price is struggling today. Here’s why.

The PointsBet Holdings Ltd (ASX: PBH) has given back this month’s gains today, falling 9%. What’s driving its share price lower?
The post Down 9%, the PointsBet (ASX:PBH) share price is struggling today. Here’s why. appeared first on The Motley Fool Australia. –

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Just as the PointsBet Holdings Ltd (ASX: PBH) share price flashes a glimmer of hope, it comes crashing down in today’s session, down 8.8% to $12.39. 

The PointsBet share price was able to edge higher in the last two weeks, driven by a strong third-quarter update, the launch of its iGaming platform in Michigan and a small US$2.9 million acquisition.

What’s driving the PointsBet share price lower? 

The PointsBet share price is swimming against the tide today with the S&P/ASX 200 Index (ASX: XJO) falling 1.30% and the S&P/ASX 200 Info Tech (INDEXASX: XIJ) falling 3.80%. 

Another contributing factor to the weakness in PointsBet shares could be the weakness in its key US-listed rival, Draftkings Inc (NASDAQ: DKNG)

Could Draftkings influence the PointsBet share price? 

PointsBet competes with Draftkings for market share in the significant US sports betting and iGaming market. 

The Draftkings share price has taken an almost 20% dive in the last three trading sessions. Despite the company’s upbeat first-quarter results and guidance upgrade on 7 May, its shares were met with the increasing occurrence of good news into a sharp share price sell off.  

DraftKings delivered a 253% increase in revenues to US$312 compared to a year ago, beating analyst estimates of US$236 million. The company also reported a 114% increase in monthly unique payers of 1.54 million. This strong result was driven by factors including increased engagement, customer retention, successful product cross-selling and major sporting events such as the Super Bowl.

A key positive that PointsBet could take away from the DraftKings result was its guidance upgrade. DraftKings raised its full-year guidance from US$0.9  billion to US$1.0 billion to $1.15 billion to $1.05 billion. 

Foolish takeaway

The US sports betting scene continues to develop in favour of betting companies. Currently, there are 21 states and the District of Columbia that allow online sports betting, up from 20 in the last quarter. There are also an additional six states that have legalised sports betting but not yet operational and 13 states working towards legalisation. 

Despite the growth opportunity at hand, the significant 9% selloff in the PointsBet share price today looks largely outside of its control. The whipsaw like action for the PointsBet share price is a more likely reflection of today’s challenging market environment for growth and tech shares

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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends 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 Bruce Jackson.

The post Down 9%, the PointsBet (ASX:PBH) share price is struggling today. Here’s why. appeared first on The Motley Fool Australia.

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