Investors who bought stocks during the Covid-19 market crash in 2020 have generally experienced some big gains in the past two years. But there is no question some big-name stocks performed better than others since the pandemic bottom.
Penn's Bumpy Ride: One company that has been a top performer in the past two years has been casino and online gambling operator PENN Entertainment Inc PENN.
The casino industry was one of the hardest hit industries during the initial stages of the COVID-19 pandemic in 2020. Fortunately for Penn investors, the company made a well-timed investment in Barstool Sports in January 2020. The Barstool deal gave Penn a 36% ownership stake in Barstool for $163 million, and Penn plans to exercise its option to acquire the remainder of Barstool in 2023.
When casinos were shut down during the pandemic, Penn made aggressive moves to stave off financial hardship. In April 2020, Penn sold the real estate of its Tropicana Las Vegas casino to Gaming and Leisure Properties Inc GLPI for $337.5 million in rent credits.
Penn also began rolling out mobile sports betting app Barstool Sportsbook in September 2020 in Pennsylvania, with influential Barstool founder Dave Portnoy leading the online marketing efforts. The Barstool Sportsbook app has since expanded to New Jersey, Michigan, Illinois, Indiana, Colorado, Virginia, Tennessee, Arizona, Iowa, West Virginia, Louisiana and Kansas.
At the beginning of 2020, Penn shares were trading at just $25.97. By the beginning of March, the stock was up to $29.70 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
When the market crashed during the U.S. COVID-19 outbreak, Penn shares dropped as low as $3.75 on March 18, 2020, during the height of the pandemic fears.
When the market bounced in late March 2020, Penn began to rebound as well. In fact, the stock made it back up to pre-pandemic highs above $30 by June.
Penn hit $50 in August and $80 in December as the Barstool Sportsbook app continued to expand and casinos reopened around the country.
Penn In 2022, Beyond: Penn shares hit their post-pandemic high of $142 in March 2021 before spending the next year and a half drifting steadily lower. MGM Resorts MGM, Draftkings Inc DKNG and Flutter Entmt ADR PDYPY subsidiary FanDuel have taken an early market share lead in the U.S. iGaming market.
In July 2021, Penn took another gamble by acquiring Score Media and Gaming Inc. for $2 billion, but the deal didn’t stop the bleeding in Penn’s stock.
To make matters worse, the controversial Portnoy was accused of sexual misconduct by Business Insider in November 2021 on the same day Penn reported a large third-quarter earnings miss. In response, Portnoy provided evidence suggesting Business Insider’s allegations against him were false. Unfortunately, Penn shares continued to drop to as low as $25.49 in September 2022 before rebounding to $35.41 today.
Still, investors who bought Penn on the day it hit its 2020 pandemic low and held on have generated a huge return on their investment. In fact, $1,000 in Penn stock bought on March 18, 2020, would be worth about $7,993 today.
Looking ahead, analysts are expecting Penn's stock to continue to rise in the next 12 months. The average price target among the 18 analysts covering the stock is $45.50, suggesting a 28.7% upside from current levels.
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