Penn Barstool plans to purchase 36% of Barstool Sports sounded like a great excitement to many, but not to some analysts. News just in confirm that on Wednesday, Penn National Gaming saw a major spike in share investment interest, which is considered the highest mark in 52 weeks so far. According to news outlets, including an article in casino.org, this surge in interest came in mid this week. Exactly coinciding with the time the so-called leading regional gaming company released a confirmatory statement saying indeed it is paying a whopping $163 million to increase its share ownership of Barstool Sports.
Initially, this appeared as rumors, and after several weeks of waiting for the official statement, it seemed like the deal had drowned. However, on Tuesday night, the Penn National press release board handed in the statement to the news wire. What they wanted to be communicated clearly is that Penn and David Portnoy’s media property has stuck a deal that allows Penn National to increase its share worth at Barstool Sports by another 32 percent.
As at current, Penn’s stock performance is already at its best frame, with reports hinting that its stock volume stands at almost five times the usual average. Most enthusiasts and willing investors are enthralled by this and wish that the trend continues the same way. Despite this, however, one analyst is not yet convinced that these signs are enough to persuade somebody, leave alone a whole company like Penn National to consider adding to its asset worth. Steven Wieczynski, the analyst agrees that this may spell a good feature to the investors but still advise on taking a more reserved approach.
According to Steve, his worries are built around the fact that there has been a lot of craze pounding the sports betting. Although the business may seem lucrative, one may never really predict what may happen the next day in this industry. Hardly a month passes by before the authorities crack a whip on the gambling industry before the taxes are revised or at least something that seems to trigger some worry on an average investor.
On the other hand, the details of the terms in the new agreement is that Penn would first submit a payment of $135 million in a lump sum and the remaining balance $68 M in equity, to be treated as interest. The deals are also open and that Penn can decide to invest more by purchasing up to 50 percent of the shares. That is, with an additional $62 million, if the governing board decides to take up the offer, Penn would be the strongest shareholder of the Barstool Sports Brand.
Steve’s warning, on the other hand, is that too much enthusiasm could be what led to the Penn National’s managing board take this move. In his argument, he highlights those big companies should be extra vigilant when it comes to sharing investing. Before such a big decision, it’s important to have analysts and experts project the possible pot-holds that may remain unclear, beforehand.