Barstool Sports President Dave Portnoy and Barstool Sports CEO Erika Nardini on the big business of the Super Bowl, inking a $163 million deal with Penn National Gaming and the future of the brand.
Penn National’s deal to buy a 36 percent stake in Barstool Sports, the controversial sports-content provider, has been painful for traders who were betting on the gaming company’s demise.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PENN | PENN NATL GAMING | 36.48 | +2.17 | +6.31% |
Short-sellers, or traders betting shares would fall, have lost $37.2 million since the deal was announced on Jan. 29, more than doubling this year’s mark-to-market losses to $71.8 million, according to the financial-analytics firm S3 Partners.
Short interest in the stock is $277.7 million, commanding 7.4 percent of the shares available for trading.
“2020 has seen steady short selling as short-sellers are selling into what they hope is the tail end of 5+ month rally,” Ihor Dusaniwsky, managing director at S3, told FOX Business.
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Penn National isn’t anywhere close to being the most heavily shorted gaming stock – it’s the eighth-largest in the domestic gaming sector – but it is the most painful to have been betting against as shares have surged 35 percent since the Barstool deal was announced.
Barstool Sports CEO Dave Portnoy did not respond to FOX Business’ request for comment, nor did Penn National at the time of publication.
Shares have been able to look past Penn’s disappointing fourth-quarter results out Feb. 6, when the gaming company posted a loss of $92.9 million as revenue rose 16.1 percent year-over-year to $1.34 billion. Both numbers were worse than expected.
However, Wall Street viewed its guidance as somewhat conservative, giving shares a lift.
“It appears either the market is confident PENN has put forth a very conservative 2020 outlook or core fundamentals have taken a backseat to the story around sports betting and Barstool,” Deutsche Bank analyst Carlo Santarelli, who held his price target at $32, wrote in a note sent to clients on Feb. 6.
Morgan Stanley’s Thomas Allen was impressed with the demographics that the Barstool deal brings.
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“Barstool Sports is giving PENN access to a customer base that is young (65% aged 21-44) and into sports betting (62% bet on sports, of which 44% bet >1x/week and 41% avg bet is >$51),” Allen wrote while raising his price target to $39 from $33. “As has been proven by DraftKings and Fanduel, having access to strong databases is key to sports betting market share.”
