Let’s take a look at some of the factors that have been putting downward pressure on the company’s shares.
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It has been an eventful start to the year for shareholders of ASX-listed wagering data analytics company Betmakers Technology Group Ltd (ASX: BET). The Betmakers share price had been on a tear, buoyed by US expansion plans and the acquisition of UK-based sports betting company, Sportech.
However, after climbing as high as a record $1.65 by late May, Betmakers shares have plunged more recently, sinking all the way back to just $1.075 as at the time of writing.
What does Betmakers actually do?
Firstly, it’s important to understand that Betmakers isn’t a bookmaker itself. Instead, it is a technology company that provides much of the data infrastructure that supports the racing industry.
So, for example, Betmakers provides data and analytics to industry regulators to help ensure race integrity. But it also sells bookmakers predesigned digital betting platforms (website templates, essentially) from which they can launch their online presence. Betmakers can also provide online bookies with the comprehensive data required to support their business.
What happened to the Betmakers share price?
The growth in the Betmakers share price started to really ramp up following the release of the company’s first-half FY21 results in February. Betmakers reported year-on-year revenue growth of 88% to $7.59 million, and underlying earnings before interest, tax, depreciation and amortisation expenses (EBITDA) of $0.04 million.
But investors may have been more interested in the update Betmakers provided on its acquisition of Sportech. The acquisition – successfully completed last month – could potentially increase Betmakers’ annual revenues by over $40 million.
The other big piece of news to emerge around that time was that well-known bookmaker Matthew Tripp – who had previously worked with Sportsbet and BetEasy – had taken a $25 million personal stake in Betmakers shares. His intention was to partner with the company to accelerate growth in its business-to-business (B2B) wagering operations.
And then what?
Everything seemed to be going well for the Betmakers share price until the company made the shock announcement it had submitted a proposal to Tabcorp Holdings Limited (ASX: TAH) to acquire its wagering and media business.
Under the terms of the deal, Tabcorp shareholders would have received $3 billion in new Betmakers shares and would have collectively held a 65% interest in the combined entity. The market reacted negatively to the proposal, and Betmakers shares plunged over 30% in the week following the announcement.
More recent news
There has been a flurry of market announcements released since Betmakers submitted its acquisition proposal to Tabcorp – not the least of which was last week’s news that Tabcorp had rejected Betmakers’ bid. Tabcorp decided to pursue a demerger strategy rather than selling off its assets – but it did leave the door open to Betmakers to jointly pursue other international commercial opportunities (though neither company said exactly what those opportunities were).
In other recent news, Betmakers also announced that, in addition to completing the Sportech acquisition, it had also snapped up the intellectual property assets of a couple of smaller racing data companies. The company planned to integrate these assets into its global suite of products. However, despite these developments, the Betmakers share price has barely budged since the beginning of June.
Betmakers share price snapshot
Despite trading well off its 52-week high, over the past 12 months, the Betmakers share price has still surged by more than 136%. Year to date, the company’s shares have also gained around 60%. Based on the current share price, Betmakers has a market capitalisation of around $874 million.
Should you invest $1,000 in Betmakers right now?
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Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.