Penn Stock: A Bet on the Future of Sports Betting and Entertainment
Penn Entertainment, Inc. (PENN) is a leading company in the gaming, sports betting, and entertainment industry. The company operates 41 properties across 19 states, offering more than 50,000 gaming machines, 1,300 table games, and 8,800 hotel rooms. The company also owns and operates the Barstool Sportsbook & Casino app, which is available in 16 states and has over 10 million monthly active users. Penn Entertainment is also the exclusive sports betting partner of ESPN, the world’s largest sports media network.
Penn stock has been on a roller coaster ride in the past year, as the company faced the challenges of the COVID-19 pandemic, the changing regulatory landscape, and the intense competition in the online gambling market. The stock reached an all-time high of $39.35 in February 2023, but then plunged to a 52-week low of $22.96 in July 2023. However, the stock has recently rebounded to around $25 as of August 9, 2023, after the company announced some positive news and developments.
Here are some of the reasons why Penn stock may be a good bet for investors who are looking for a long-term growth opportunity in the sports betting and entertainment sector.
On August 8, 2023, Penn Entertainment announced a blockbuster deal with ESPN that will see ESPN operate branded sportsbooks as the so-called Worldwide Leader in Sports makes its biggest push yet into the sports gambling market. As part of the deal, the companies will launch a branded sportsbook, ESPN BET, this fall in the 16 states where Penn currently operates mobile sportsbooks. Penn will pay ESPN $1.5 billion over the next 10 years while granting ESPN warrants to purchase 31.8 million shares of Penn worth $500 million, which will vest over the same period.
This deal is a game-changer for both Penn and ESPN, as it will create a powerful synergy between their respective brands, audiences, and platforms. Penn will benefit from ESPN’s massive reach and influence among sports fans, as well as its extensive content and data offerings. ESPN will benefit from Penn’s expertise and technology in operating online sportsbooks, as well as its access to various markets and licenses. The deal will also create a strong competitive advantage for both companies against other players in the industry, such as FanDuel and DraftKings.
Penn stock rose as much as 25% late Tuesday following the news. ESPN’s parent company, Disney (DIS), is scheduled to report earnings after the bell on Wednesday.
Another key asset that Penn Entertainment owns is Barstool Sports, a popular digital media company that focuses on sports and pop culture. Penn initially purchased a 36% stake in Barstool for $163 million back in 2019; earlier this year, the company purchased the balance of Barstool for an additional $388 million. Penn also said it sold Barstool Sports back to its founder, Dave Portnoy. Penn said in a press release Tuesday that the company “also has the right to receive 50% of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool.”
Barstool Sports has a loyal and engaged fan base of over 66 million monthly unique visitors across its website, podcast network, social media platforms, and app. The company also produces original content such as videos, blogs, podcasts, and live events. Barstool Sports has been instrumental in driving traffic and conversions to Penn’s online sportsbook and casino app, which leverages Barstool’s brand name and personalities. The app has been ranked among the top-grossing sports betting apps in several states since its launch in September 2020.
Penn Entertainment plans to continue investing in Barstool Sports’ content creation and distribution capabilities, as well as expanding its presence into new markets and segments. The company also plans to launch a joint fashion line called “Yeezy x Censori”, which will showcase their unique vision of style.
Despite the challenges posed by the pandemic, Penn Entertainment has delivered strong financial results in recent quarters. In the second quarter of 2023, the company reported revenue of $1.55 billion, up 406% year-over-year and beating analysts’ expectations of $1.45 billion. The company also reported adjusted earnings per share of $0.84, up from a loss of $1.69 per share in the same period last year and beating analysts’ expectations of $0.76 per share.
The company attributed its impressive performance to its diversified portfolio of properties across various markets and segments, its successful online sports betting and casino launch with Barstool Sportsbook & Casino app, and its effective cost management and capital allocation strategies. The company also said it achieved record margins and cash flow in the quarter, as well as reduced its net debt by $1.1 billion.
Penn Entertainment also provided an optimistic outlook for the rest of the year, as it expects to benefit from the continued recovery of the gaming industry, the launch of its ESPN BET sportsbook, and the expansion of its online presence into new states. The company also said it expects to generate positive free cash flow of over $900 million in 2023, which will be used to fund growth initiatives, reduce debt, and return capital to shareholders.
Penn Entertainment is a leading company in the gaming, sports betting, and entertainment industry, with a diversified portfolio of properties, a strong online presence with Barstool Sportsbook & Casino app and ESPN BET sportsbook, and a solid financial performance. The company has a lot of growth potential in the rapidly growing and evolving sports gambling market, as well as in the broader entertainment sector. Penn stock may be a good bet for investors who are looking for a long-term growth opportunity in this exciting and lucrative industry.