Forget about March coming in like a lion and going out like a lamb – at least when it comes to Penn National Gaming stock.
The more apt saying for $PENN stock investors this month comes from Garrison Keillor:
“March is the month God created to show people who don’t drink what a hangover is like.”
You can see what a stock hangover looks like right on the company’s own stock chart for the month.
Eventful March for Penn National stock
On March 1, Penn’s share price was more than $126 at the close of trading. By the fifth, shares dipped to just above $108.
Then, bam! $PENN’s peak closing price, above $136 a share, came on the Ides of March. Not coincidentally, with Penn’s share price at a record high, Penn CEO Jay Snowden sold 71,540 shares at an average price of $140.61 a share. His total sale of Penn stock was good for $10.1 million.
On March 22, $PENN joined the S&P 500 even as its price had begun to slide.
Despite continuing negative share movement since the middle of the month, most financial coverage of Penn stock remained upbeat.
Accounts emphasized the growth of sports betting, the rollout of their allied Barstool Sportsbook mobile app, and the stock’s inclusion on the S&P index.
But the price slide continued to below $100. When it dropped down to around $98 on March 30, a barrage of uniformly negative pieces appeared. The stock closed the trading day at $102.84.
$PENN coverage now in negative territory as well
The Street, a reliable cheerleader for Penn National and Barstool, told readers the company and DraftKings were sliding on Monday following a Deutsche Bank report that said the future of online sports betting in New York state was “hanging by a thread.”
“The early read, and our view, is that there are too many variant agendas and too little time to get this issue sorted out in this budget session.”
The story closed with this quote: “We think NY mobile legalization, the crown jewel of this legislative session, appears to be kicking the can for another time.”
A Yahoo! Finance headline on Tuesday sums up the bearish outlook: Penn National Gaming Stock Gives Every Indication Of Being Significantly Overvalued.
More than a week ago, Forbes published an article entitled Penn Stock Is Flying Too High.
March Madness could move $PENN stock
Writing in Seeking Alpha, commentator Howard Klein took a balanced but cautious approach, saying March Madness wagering, not the usual stock fundamentals, will set Penn’s price near term:
“A solid performance of the NCAA tournament could run Penn back up close to its $130 high. A so-so result might keep it mired close to where it is, or perhaps dip below a $100 support level. A really bad NCAA number could trigger a dive. A really bad NCAA number could provoke a dive significantly below the $100 and pool somewhere close to [$75]…
“In summary, this is one good company with good prospects but living or dying from sports events to new legalization is what could move the stock, not any elegant projecting of standard data points like forward earnings profiles forecasting it at $200.”
The reality is no amount of Barstool Sports merch giveaways will change Penn’s stock prices in the near term.
DraftKings has an ailing stock price, too
Investor’s Business Daily has taken note of DraftKings’ stock price decline, writing on March 30:
“DraftKings (DKNG) tumbled 8.5%, closing below its 50-day line for the first time since a Jan. 14 breakout above a cup-with-handles $56.08 buy point. The stock is more than 20% off its 52-week high, set just five sessions ago on March 22.”
Seeking Alpha has called DraftKings’s price fair but added that the company lacks profitability.
Also on Tuesday, news dropped that DraftKings is acquiring Vegas-based sports betting content platform VSiN in a deal worth around $100 million. It appears additional mergers and acquisitions may be in the plans for DraftKings. $DKNG stock closed the day at $61 after opening at $59.21.
Possible FanDuel stock spinoff from Flutter
Also of interest to investors in gambling stocks is the possibility of the British-based Flutter Entertainment ($PDYPY) making a stock offering in the US for FanDuel. Flutter owns 95% of the DFS and sports betting giant that now also has online casino offerings in the US.
While the prospect was floated two weeks back, nothing new has come of that to date.
FanDuel reported a 40% share of the US sports betting market and total revenue of $967 million in 2020 – much higher than $614 million for its biggest competitor, DraftKings.
For more on the history of Penn National, see our recently-published three-part series on the rise of the Wyomissing, PA-based gambling company.
- The early years from 1969 to 2005
- Middle years of growth from 2006 to 2018
- A company refocus to online gambling from 2019 to the present
Lead image via Dreamstime.