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Barstool Sports is worth billions!!!
8 months ago Penn National Gaming ($PENN) announced they were acquiring @BarstoolSports in a deal that valued the company at $450M. It was structured as $163M for 36% of the company -- $135M in cash and $28M in $PENN stock.
8 months ago Penn National Gaming ($PENN) announced they were acquiring @BarstoolSports in a deal that valued the company at $450M. It was structured as $163M for 36% of the company -- $135M in cash and $28M in $PENN stock.
After this transaction was completed it meant that $PENN owned 36% of @BarstoolSports, the Chernin Group which took a majority stake in @BarstoolSports years earlier would also own 36% and then @BarstoolSports employees including @stoolpresidente would own the remaining 28%.
Over the next three years $PENN can buy another 14% of @BarstoolSports for $62M which would take their stake up to 50% then all involved parties (Penn, Barstool, Chernin) will have to agree on a price for the remaining 50% of @BarstoolSports.
Back in mid January before the Barstool Sports deal was announced $PENN's stock price was trading in the mid $20's which put their market cap around $3.5 billion.
As of yesterday $PENN is trading in the low $70's which now puts their market cap around $9.7 billion.
As of yesterday $PENN is trading in the low $70's which now puts their market cap around $9.7 billion.
So how did $PENN add $6.2 billion of market cap in the middle of a pandemic while most of their properties were closed and revenues plummeted. The answer is pretty simple... it was all @BarstoolSports.
In order to appreciate the impact @BarstoolSports has had on @PENN's stock price you have to look at similar casino stocks and how they've performed since Covid:
$MGM = back to 68% of pre-Covid highs
$RRR = back to 65% of pre-Covid highs
$BYD = back to 79% of pre-Covid highs
$MGM = back to 68% of pre-Covid highs
$RRR = back to 65% of pre-Covid highs
$BYD = back to 79% of pre-Covid highs
If we take the average of these three casino stocks plus others like $CZR $TRWH $MCRI you get stock prices approximately 70% back to pre-Covid highs which means if $PENN had not done the deal with @BarstoolSports their stock might be trading at $17-18 right now instead of $70-71
Considering that $PENN has 137 million shares outstanding it means @BarstoolSports didn't add $6.2 billion of market cap value as implied earlier but perhaps that number is closer to $7.3 billion.
So how has @BarstoolSports added $7.3 billion of value to $PENN's stock price?
First off, they have @stoolpresidente who might just be the best content marketer in the country.
First off, they have @stoolpresidente who might just be the best content marketer in the country.
Second, @barstoolsports has created a content marketing machine that includes their website, podcasts, merchandise sales, product sponsorships, DDTG (Portnoy's daily trading live stream) and their dominance in all things related to sports on social media
Third and most importantly, @BarstoolSports has now launched their own sports betting app ( @BSSportsbook) to compete against @DraftKings and @FanDuel.
When $DKNG came public earlier this year via a SPAC IPO it opened everyone's eyes to the potential for sports betting.
When $DKNG came public earlier this year via a SPAC IPO it opened everyone's eyes to the potential for sports betting.
$DKNG is now a $20 billion company and $PENN wants a piece of the sports betting market via @BarstoolSports.
Personally I think both companies are winners as the TAM (total addressable market) continues to expand as more states legalize sports betting to increase tax revenues.
Personally I think both companies are winners as the TAM (total addressable market) continues to expand as more states legalize sports betting to increase tax revenues.
Investors are betting that $PENN and @BarstoolSports can leverage their massive audience and fan base to generate low CAC (customer acquisition cost) for their new sports betting app called @BSSportsbook.
Between their websites, podcasts, DDTG and other social media efforts @BarstoolSports reaches tens of millions of potential @BSSportsbook users every month.
Barstool has several of the most popular podcasts in the country including @CallHerDaddy with @AlexandraCooper.
Barstool has several of the most popular podcasts in the country including @CallHerDaddy with @AlexandraCooper.
I've seen estimates that the global sports betting market is more than $150 billion annually with companies like @BarstoolSports, DraftKings and FanDuel all fighting for their slice of that massive pie.
If @BarstoolSports and $PENN can carve out 25% market share over the next few years then this recent run up in $PENN's stock price and the $7.3 billion of market cap added thanks to the @BarstoolSports acquisition makes sense and might only be the beginning of something bigger.
Just like @BarstoolSports is planning to use their online/media dominance to help fuel user growth for @BSSportsbook, I strongly suggest @stoolpresidente and @EKANardini acquire a stock trading app like @WebullGlobal to compete against @RobinhoodApp and other investment apps.
I now firmly believe $PENN could be a $25-30 billion company in 2-3 years if @BarstoolSports can take market share with their @BSSportsbook business as well as looks to enter into new markets where their lower customer/user acquisition costs become a massive advantage.
The future for $PENN is bright but it's not because of their casinos & gaming business (which I'm sure will bounce back)...but instead it's because of what @BarstoolSports brings to the table in terms of cheaper/faster customer acquisition for different online & mobile products.
