The Betmakers Technology Group Ltd (ASX: BET) share price has been on an unstoppable rampage recently. The now $1 billion market capitalisation company has added over 85% to its valuation since the start of the year and gained an additional 10% last Friday alone.
Is now a good time to buy in?
BET share price
What does Betmakers do?
It’s easy to think of Betmakers as being a middleman between bookmakers such as Pointsbet Holdings (ASX: PBH) or Sportsbet and relevant racing authorities.
It provides all the back end data such as comparison odds, commentary, official prices and live vision that bookmakers require to run their own betting platforms. It generates revenue through a variable model and charges a percentage turnover on both sides of the transaction.
It also provides a white-label software platform that allows new bookmakers to utilise its pre-built model, which provides the functionality to manage things such as user accounts, promotional content and available markets.
Why has the BET share price been rising?
The company hasn’t released anything recently that would be an obvious catalyst behind the rally of Betmaker’s shares. It seems sentiment has been improving and more investors might be catching on to this company that’s quietly gone under the radar up until recently.
Last year, Betmakers raised $50 million in order to fund its acquisition of Sportech PLC – a provider of betting software, hardware and other solutions to more than 150 clients in over 30 countries.
This acquisition seems to have significantly increased the company’s future prospects and it’s estimated that Betmakers will now have access to over 95 new total customers, 200 racetracks and 25 service agreements for white-label software solutions.
Time to buy Betmakers shares?
The stock has run incredibly hard recently and trades at around 33x forward sales according to CapitalIQ consensus estimates.
That being said, it’s a possibility that the opportunity behind the Sportech deal is even larger than the market might be appreciating. In a high growth business such as this with many moving parts, the valuation can often be fairly tricky.
Betmakers remains a hold for me at the moment, as I’d like to see how the Sportech acquisition starts translating into some consistent revenues and how this might pave the way towards profitability.
For some more share ideas, click here to read: 2 high quality ASX retail shares to watch in April.
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