Shares of casino company Penn National (NASDAQ:PENN) dropped 25.7% in October, according to data from S&P Global Market Intelligence, partly driven by third-quarter earnings results. But shares have recovered 18.3% in the first week of November, so most of the sell-off didn’t last long.
Quarterly revenue was down 16.6% to $1.13 billion, but adjusted EBITDAR rose 11% to $452.6 million. The drop in revenue isn’t as bad as you might expect considering the impact COVID-19 has had on consumer discretionary spending at hotels and casinos. But that’s not really what investors were reacting to anyway.
The Barstool Sportsbook launched in September in Pennsylvania and had what management called a successful launch. 48,000 people have registered through the app in the state and $78 million was bet on the platform. That’s not enough to make an impact on Penn National’s finances yet, but it could be a big business long-term.
There wasn’t much fundamental change for Penn National’s investors in October, besides learning how quickly business is coming back to casinos across the country. But the stock has surged in 2020 on the hope that online gambling will be a big business long-term. That could be true, but it’ll take some time for the business to develop and if you own shares for its online gambling potential I don’t see a reason to change that thesis today.