Penn National's Barstool Sportsbook to arrive at Detroit's Greektown Casino Hotel Guests will enjoy a wagering experience in close proximity to dining and numerous televisions showcasing sports action from across the country and around the world. The Barstool Sportsbook at Penn National’s Ameristar Casino in Colorado. The stock hit $100 today. (Image: Denver Westword) In the process, Penn stock closed above $100 for the first time. The $31.1 million deal will allow Penn National to launch its Barstool Sportsbook in another state in 2021. This a crucial purchase for PENN as the company prepares for legalized sports betting in Maryland. On November’s election day, Maryland voters overwhelmingly approved legal sports betting. Shares of Penn National Gaming (NASDAQ: PENN) hit new 52-week highs Thursday ahead of the company's Sept. 18 launch of the Barstool Sportsbook in Pennsylvania. What Happened: Optimism for Penn. Download Barstool Sportsbook & Casino and enjoy it on your iPhone, iPad, and iPod touch. Bet on sports with the Barstool Sportsbook from Penn National Gaming (NASDAQ: PENN) and Barstool Sports while enjoying the same online sports betting experience used by Dave “El Presidente” Portnoy and Dan “Big Cat” Katz.
© Provided by BenzingaShares of Penn National Gaming (NASDAQ: PENN) hit new 52-week highs Thursday ahead of the company's Sept. 18 launch of the Barstool Sportsbook in Pennsylvania.
What Happened: Optimism for Penn National Gaming and its partial ownership and partnership in Barstool Sports continues to send shares higher.
Stifel lifted its price target for the stock by 70%, citing “Portnoy Momentum,” a reference to Barstool founder Dave Portnoy. Good betting apps.
Jim Cramer said Thursday morning that Penn “may be the best casino stock to own in the world.”
Why It’s Important: The Barstool Sportsbook app launches Friday in Pennsylvania, ahead of the second week of the NFL season. States with legalized sports betting saw record numbers in the month of August, including New Jersey, which set the all-time monthly record.
Pennsylvania, which is the first state where Barstool Sportsbook is going live, reported a record monthly sports betting handle of $365 million in August.
This represented an increase of 121.5% from July and a 234.7% increase from August 2019.
FanDuel led the way in Pennsylvania for August with a handle of $149.2 million, representing 40.9% market share.
DraftKings Inc (NASDAQ: DKNG) was second with $88.2 million and a 24.2% market share in the state. Rush Street's monthly handle of $57.4 million was good for 15.7% market share. FoxBet had 6.2% market share in August, down from 7.3% in July. Meridianbet app download apk.
FoxBet, which is the subject of IPO rumors, is owned by FanDuel parent Flutter Group and Fox Corporation (NASDAQ: FOX).
Roundhill Sports Betting & iGaming ETF (NYSE: BETZ) founder Tim Maloney told Benzinga that 'the brand value that Barstool brings from the media side is a competitive advantage that existing players like DraftKings and FanDuel do not have.”
Portnoy has been vocal about Penn National, a company in which he owns shares. He's named several reasons why he thinks Penn shares are undervalued, including the fact that “people root for Barstool like we’re a sports team.”
Portnoy also said the built-in user base is a huge positive.
“We have an entire marketing force that we don’t have to pay. We have a marketing force that you can’t buy,” Portnoy said.
The return of major sports drove August numbers higher, showing pent-up demand.
The return of Big Ten college football should also help the sports betting handle in the state of Pennsylvania, given the league’s proximity to the state.
What’s Next: Barstool has 66 monthly users that Penn National hopes it can convert into sports bettors.
Barstool Sportsbook Penn National Sports
Penn National also hopes it can convert around 25% — 5 million — of its mychoice loyalty members into online gamblers.
Penn National Gaming CEO Jay Snowden will join Barstool executives Portnoy and Erika Nardini on CNBC’s 'Mad Money with Jim Cramer' Thursday night.
PENN Price Action: Shares of Penn National were trading 6.37% higher at $72.16 at last check Thursday. The stock hit a new 52-week high of $74.73 early Thursday and is up 165% year-to-date.
Photo courtesy of Barstool Sports.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Penn National is America’s new hottest gaming stock. The company is up some 1,200% from its pandemic lows to around $53 at the time of writing.
And just like DraftKings earlier this year, analysts keep raising their price targets higher and higher as the stock climbs.
Goldman Sachs became Penn’s latest supporter last week, initiating the stock as a ‘buy’ with a $60 price target.
“Penn sits at the cross-section of a rapidly rebounding regional casino space and inflecting growth in sports betting,” Goldman analyst StephenGrambling wrote.
Breaking down Barstool Sportsbook economics
Grambling argued Barstool Sportsbook’s customer base and content creation engine would drive “one of the lowest customer acquisition costs in the industry,” allowing Penn to quickly take sports betting share.
Goldman estimated the upcoming Barstool Sportsbook app could acquire customers at $57 compared to $193 for DraftKings and $190 for FanDuel. For further context, BetMGM said last week it hoped to reach a blended $250 CPA.
Goldman also pointed to Barstool’s social media reach, saying the two factors pointed towards a 15% market share for the Barstool Sportsbook.
“Based on our DKNG valuation, that methodology would drive a $4.5 billion valuation for Barstool/Penn sports betting alone,” Grambling said.
That’s $4.5 billion out of a current Penn market cap of $7 billion. In other words, a huge amount of Penn’s current market value is already driven by the Barstool Sportsbook.
As RoundhillInvestments CEO WillHershey put it recently:
“This is not hyperbole — the Penn Barstool acquisition may be one of the best deals of all time. I wonder what position the company would be in had it not gotten done.”
Questions to be answered for Penn National
If that $4.5 billion valuation stems from massive sports betting growth on strong margins, is it realistic?
Here’s more from Goldman:
“From the company’s 66 million monthly unique visitors, 62% bet on sports with 44% of those betting at least 1x per week. Additionally, 65% of their audience is in the key 21-44 age group. The cross-section implies a potential database of users that actively bet on sports of 18 million. Even if only 10% of these users are converted to the Penn/Barstool app, [that’s 1.8 million users.]”
Penn National, of course, already paid $163 million for access to that customer database by buying its Barstool stake. So ignoring that cost in new CPAs seems a little disingenuous.
But perhaps more importantly, there’s an assumption of 1.8 million sign-ups for a product the world has not seen yet.
And the app is on track to launch in September instead of August as initially planned, perhaps a tiny warning sign.
“What’s more important?” Penn CEO JaySnowden said at the firm’s recent Q2 results. “Rushing it and getting to some MLB and NBA games in August? Or doing this right, launching it in September when we know it will deliver a great experience for the end user?”
Execution is key
Getting it right is, of course, more important than rushing it. But it’s also a risk to debut your first-ever sports betting app into the furnace of NFL betting.
Do you want any bugs exposed on those sleepy days in August, or on NFL Sunday when 50,000 Philly fans log on at 1 pm EST to back the Eagles?
The product really is key here, and, of course, it’s an unknown. But there is likely a low bar to clear. We know the Kambi back-end should work – DraftKings and BetRivers have built good market share on the back of it.
Combine that with the Barstool marketing machine, and the Penn front-end really just has to be good enough.
Why that’s the case
As Eilers & Krejcik analyst AlunBowden put it in a recent note: “Barstool is a different beast. There is no doubting the willingness or desire of the team to throw themselves at gambling promotion.”
He added, however: “Barstool will have to excel at the fundamentals to make this work in product, retention, customer service, and trading. And that is not as easy as it looks.”
It’s not, and it’s an area Penn may struggle, simply because it’s new to the space and sports betting is operationally complex. But it’s worth remembering it took Sky Bet in the UK nearly a decade to back up its media presence with a great product. And when it did, it exploded.
Barstool has a clear route to a similar level of success. The road just might be bumpier than some analysts are expecting.
Buy or sell Penn National stock?
As for the Penn valuation, a word of warning: earlier this year when $DKNG was soaring, one reason was its exclusivity.
Barstool Sportsbook Pa
It was essentially the only way for US investors to get access to the US online sports betting industry.
That is changing rapidly. Companies like MGMand CZRare now pushing their sports betting operations to investors. Companies like GAN, Rush Street Interactive, and Sportradar can (or could) also offer some exposure to the sector. Or investors can just pick an entire bundle of sports betting stocks via the $BETZ ETF.
Barstool Sportsbook States
Either way, if price is a function of supply and demand, a growing glut of supply can’t be good for any individual stock’s price.
As a result, while the Barstool Sportsbook may deliver on its massive promise, it is far from a sure bet.
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