Barstool buy buoys Penn Nat’l; MGM’s ad blitzkrieg

JP Morgan analysts upped their near- and long-term cash flow estimates for Penn National Gaming, based on regional trends and sports betting. “While we recognize PENN’s impressive share price outperformance, and many sell-side firms have thrown in the towel with downgrades, we still see value and catalysts ahead,” wrote Joseph Greff. He acknowledged that there is “plenty of investor skepticism related to PENN’s ability to compete with DraftKings, Fanduel, CZR, MGM/GVC, et al., given PENN’s relative balance sheet size … but we believe this risk, to the extent it is meaningful, to compete is now diminished given ~$950m raised from its recent equity raise.” The Pennsylvania kickoff of Barstool Sports’ betting application is described as “encouraging both from a volume and marketing spend perspective”

How successful is Barstool? In its first four days of going live in the Keystone State, it “recorded 30,000 app downloads in Pennsylvania and registered 24,000 customers, with 12,000 of these customers first-time depositors … depositing an average $243.” Color us impressed. That translated into $11 million handle, 22% of which was directly driven by Barstool picks. “Across the U.S., the app recorded 180,000 downloads, 95% of which were new to PENN’s ecosystem. The app was the number one most downloaded sports betting and sports app in the country, and, importantly, these results came with zero external marketing spend.” Next up at Barstool: Michigan and Illinois. And it’s coming to market at a propitious time, as sports betting handle reaches record levels, and a plethora of collegiate and major-league sports are on the tote board. Besides, the advent of cooler weather will incentive Internet gambling, Greff believes, and he projects Penn to capture 15% of domestic market share.