The Pointsbet Holdings Ltd (ASX: PBH) share price is on fire right now. In fact, shares in the Aussie wagering group rocketed an astonishing 86.7% higher on Friday.
Why did the Pointsbet share price rocket higher?
The major trigger was Pointsbet’s full-year results announcement on Friday morning.
Total revenue for the wagering group rocketed 194% higher to $75.2 million in a breakout year.
Pointsbet reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.9 million for its Australian trading arm on the back of strong growth.
The group reported an $82.1 million net win result, up 191% compared to FY19 figures.
It wasn’t just the strong financials that saw the Pointsbet share price surge higher. The Aussie wagering group also announced a new 5-year sports media deal with NBCUniversal in the United States.
That’s another big step into the lucrative US sports betting market which points to more future growth in FY21.
Is it too late to buy?
It’s hard to argue an ASX share is good value after surging 86.7% higher in one day.
The Pointsbet share price has now climbed a whopping 185.7% higher in 2020 and more than 1,000% since the March bear market.
There are certainly some challenges ahead for the Aussie betting company. The coronavirus pandemic has shown that further disruption to sports could lie ahead which isn’t good for online betting volumes.
However, key markets have thus far persevered. Given Pointsbet is still a loss-making company, we can’t even use a price-to-earnings (P/E) ratio to help in valuation.
I would put Pointsbet in the same speculative basket as the Aussie tech shares. Shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) continue to soar in 2020.
I think at this point the fundamental or ‘intrinsic’ valuations have been left behind. However, a record low interest environment and favourable monetary policy bode well for further growth.
I think if sports remain underway in key markets like the US and Australia, then the Pointsbet share price has further to run.
However, if we see further disruptions to 2021 seasons, then the priced-in earnings growth could see a correction for the ASX wagering share.
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More reading
- How to invest in ASX shares in uncertain times?
- ASX 200 drops 0.9%, Costa reveals healthy result
- ASX Stock of the Day: Pointsbet share price surges 77% on NBC deal
- Why Costa, Flight Centre, Polynovo, & Pointsbet shares are storming higher
- Pointsbet share price on watch as FY20 revenue triples
Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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