Barstool Sportsbook Optimism Powers Penn National To 52-Week High

Shares of Penn National Gaming PENN hit new 52-week highs Thursday ahead of the company's Sept. 18 launch of the Barstool Sportsbook in Pennsylvania. 

What Happened: Optimism for Penn National Gaming and its partial ownership and partnership in Barstool Sports continues to send shares higher.

Stifel lifted its price target for the stock by 70%, citing “Portnoy Momentum,” a reference to Barstool founder Dave Portnoy.

Jim Cramer said Thursday morning that Penn “may be the best casino stock to own in the world.”

Why It’s Important: The Barstool Sportsbook app launches Friday in Pennsylvania, ahead of the second week of the NFL season. States with legalized sports betting saw record numbers in the month of August, including New Jersey, which set the all-time monthly record.

Pennsylvania, which is the first state where Barstool Sportsbook is going live, reported a record monthly sports betting handle of $365 million in August.

This represented an increase of 121.5% from July and a 234.7% increase from August 2019.

FanDuel led the way in Pennsylvania for August with a handle of $149.2 million, representing 40.9% market share.

DraftKings Inc DKNG was second with $88.2 million and a 24.2% market share in the state. Rush Street's monthly handle of $57.4 million was good for 15.7% market share. FoxBet had 6.2% market share in August, down from 7.3% in July.

FoxBet, which is the subject of IPO rumors, is owned by FanDuel parent Flutter Group and Fox Corporation FOX.

Roundhill Sports Betting & iGaming ETF BETZ founder Tim Maloney told Benzinga that "the brand value that Barstool brings from the media side is a competitive advantage that existing players like DraftKings and FanDuel do not have.”

Portnoy has been vocal about Penn National, a company in which he owns shares. He's named several reasons why he thinks Penn shares are undervalued, including the fact that “people root for Barstool like we’re a sports team.”

Portnoy also said the built-in user base is a huge positive.

“We have an entire marketing force that we don’t have to pay. We have a marketing force that you can’t buy,” Portnoy said.

The return of major sports drove August numbers higher, showing pent-up demand.

The return of Big Ten college football should also help the sports betting handle in the state of Pennsylvania, given the league’s proximity to the state. 

What’s Next: Barstool has 66 monthly users that Penn National hopes it can convert into sports bettors.

Penn National also hopes it can convert around 25% — 5 million — of its mychoice loyalty members into online gamblers.

Penn National Gaming CEO Jay Snowden will join Barstool executives Portnoy and Erika Nardini on CNBC’s "Mad Money with Jim Cramer" Thursday night.

PENN Price Action: Shares of Penn National were trading 6.37% higher at $72.16 at last check Thursday. The stock hit a new 52-week high of $74.73 early Thursday and is up 165% year-to-date.

Photo courtesy of Barstool Sports.