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If you bet against Barstool Sports at this point, you are setting yourself up for a loss. It seems that everything the company touches turns to gold. They say media is a dying industry yet Barstool Sports has created a behemoth. Barstool relates to all walks of life. They provide A+ content in podcasts, blogs, merchandise, and more. They interview and hang out with the world's coolest individuals, and have a staff of employees who are well renowned. The difference-maker? Barstool's approach to sports betting. Here is where Penn National Gaming (NASDAQ: PENN) enters the chat.
Photo: Penn National Gaming
For those of you who don't know how Penn came into the picture, let's rewind to the beginning of the year. In January of 2020, just around the time of the Super Bowl, news broke that Penn National Gaming was finalizing a deal to purchase Barstool Sports for a whopping $450 million dollar deal. According to the Wall Street Journal, The regional casino operator will immediately buy a 36% stake in Barstool for $163 million in cash and stock. Three years later, the company will pay an additional $62 million to increase its stake to 50%. The plan for the two sides was to continue growing Barstool Sports as a more than just media company while creating Barstool branded hotels, casinos, gambling events, and more.
This wasn't the first deal in the company's 18-year history. Less than 5 years ago, Dave Portnoy, also known as "El Presidente" who founded the company", moved the operations from Milton, Massachusetts to the Big Apple. The Chernin Group purchased 51% of the company in 2016 which helped land former AOL CMO, Erika Nardini, to be the company's CEO. This was just the start of Barstool's success story.
Photo: Business Insider
Fast forward to September 18th, 2020. Why is this day so important to the company? Well, it is the official launch of the Barstool Sportsbook App. After a successful three day soft launch and approval through the Pennsylvania Gaming Control Board, Barstool is set to make history. As of now, it is only available in the state of Pennsylvania, but Penn stated that it will come to additional states in the next few months. Many of the big-name gamblers in the company, including Portnoy, Dan "Big Cat" Katz, Martin J. "Marty Mush", and more, will be live streaming events at a satellite spot in Philadelphia.
It is an exciting time for the company, and Stoolies around should be hyped too. But going back to the financial talk, $PENN has defied odds. When the Barstool deal was announced, the $PENN stock jumped from around $25 per share to around the $34-$38 mark. When the pandemic hit, and the world shut down, the stock plummeted. On March 18th, $PENN hit the basement and had a share price of $4.52. While casinos closed, investors had additional concerns with the company's liquidity.
Barstool is no stranger to adversity. The company was built "brick by brick" and has dealt with hate and criticism from around the country. This was not the demise of Barstool Sports. When the pandemic came knocking, and quarantine shut down sports, Portnoy stepped up to the plate. He began day trading and absolutely dominated the market. With the help of employee Mike "Large" McCarthy and under the alias of DDTG (Davey Day Trade Global), Portnoy entered the stock market. His following has fueled a new generation of investors, by live-streaming his journey of investing. Pres. made (and lost) a lot of money, but it garnered major attention including countless interviews with Fox Business, Mad Money on CNBC, and interviews with the Winklevoss twins and President Trump.
We are now closing in on the end of Q3, and $PENN stock has just broken over $70 per share. Not only because of the sportsbook launch, but Stifel analyst Steven Wieczynski reiterated his buy rating on Penn's shares. His price forecast jumped from $47 to $85. His new target represents potential gains for investors of roughly 16% from the stock's current price near $73. Even with this statement, some analysts say it will rise to $100 by end of year closeout. You can't also forget about the "Dave Portnoy Momentum" which has aided the shares to surge more than 165% year to date.
According to The Street, Should $PENN get to $90, it could put the 261.8% extension in play up at $96.51, followed by $100. Statistically speaking, a close over $90 gives investors favorable odds of reaching $100 (although it is a probability, not a guarantee).
Graph: Financhill
With online sports gambling gaining traction every year, this stock should expect long term success. $PENN has broken down boundaries, defied analysts, and can be considered one of the hottest stocks of 2020. I am NOT a financial analyst and do not take this article as potential advice. But if analysts suggest joining the Pirate Ship, you might as well hop on the ship while you can. $PENN is set to soar.