Penn Registers 1.25M Shares Portnoy Can Sell, He Says He Won’t

In a regulatory filing with the Securities and Exchange Commission (SEC), Penn Entertainment (NASDAQ: PENN) registered just over 1.25 million shares that Barstool Sports founder David Portnoy can sell in the future.

The filing arrived three days after Penn announced it sold Barstool back to Portnoy for just $1 after paying $550 million in cash and stock for the media property. That sale was announced the same day Penn unveiled a 10-year, $1.5 billion partnership with ESPN through which the gaming company will apply ESPN Bet branding to its internet and retail sportsbooks.

We issued these shares of common stock to the selling shareholder on February 17, 2023 in connection with our acquisition of all of the outstanding shares of common stock of Barstool Sports, Inc. not already owned by us,” according to Penn’s SEC filing.

The regional casino operator added that it waived “all contractual restrictions on transfer applicable to the shares.”

Portnoy Not Looking to Sell

Perhaps surprisingly to some, Portnoy took Penn’s sale of his company in gracious fashion. Reacquiring an asset for $1 that some analysts estimate is worth $600 million or more probably smoothed over any ill will.

“I ain’t selling $penn at this price that’s for sure. I think people are overreacting. I said it’s a win win and I believe that. People panicking in the streets and reacting to fake news. I think it’s on sale now,” he wrote in a xeet (tweet).

He referenced a decline in Penn stock that’s seen it give back all the gains accrued immediately following the ESPN news. Portnoy added he’s “a financial advisor and I’m not part of Penn.” If he sold all the shares registered by the casino operator, his stake in the company would be reduced to 226,800 shares.

Rough Ride for Penn Shares

Portnoy’s comments on his plans to hold his Penn stake for the foreseeable future may assuage some skittish retail investors that flocked to the stock over the past couple of years, but there’s plenty of work to be done as the shares are off 20.71% year-to-date. After touching an all-time high around $142 in early 2021, the stock is on pace to close around $23.50 today.

Additionally, reports surfaced that Penn wasn’t ESPN’s first choice for a marketing deal nor was it the network’s second choice. Even if that speculation is inaccurate, there’s no denying sell-side analysts covering Penn are cautious in their assessments of the ESPN pact.

“Bottom line is that for now we remain uncertain/skeptical of how this all will play out. While we can see a path to long-term profitability, the time and required patience to get there could prove more difficult,” observed Stifel analyst Steven Wieczynski.