The selection indicator appears based on the origin of the entity. It looks like perhaps the billboard here is offset (since it has a vertical origin of bottom).
There’s a few workarounds you can do in your app here, like create an invisible entity with the right shape/size to give you more control over the selection indicator: Position of the selection rectangle when using polyline
Or disable the built-in selection indicator and create your own as suggested here: How to not auto centralize viewer selectionIndicator poistion for an entity with label, billboard and polyline?