Penn Entertainment Shares Soar as Activist Investors Call for a Sale

Shares of Penn Entertainment (PENN) soared more than 18% in intraday trading Friday after a consulting firm and activist investor said the casino, online gaming and racetrack operator should seek a sale.

Donerail Group managing partner Will Wyatt wrote to the company’s board of directors and said the members were “riverboat gamblers” whose misguided interactive strategy and mismanagement of capital allocation had “destroyed shareholder value.” .

Penn criticized for buying sports stools

Wyatt pointed to a series of failed online gaming businesses, notably the 2020 purchase of Barstool Sports, which Penn ended up selling back to its founder for $1, totaling a loss of nearly $1 billion, according to the investor. activist.

Additionally, Wyatt criticized what he called “excessive compensation” for CEO Jay Snowden “despite extremely poor performance.”

Wyatt argued that Penn’s stock price is “significantly below the company’s intrinsic value” and that its casino assets alone could be worth more than double the company’s current market capitalization. He put a potential price tag for Penn at between $5.9 billion and $6.9 billion.

Penn Stock Rises After Activist Letter

Wyatt added “how can the Board continue to argue the benefits of operating as an independent entity, which has thus far represented an excessively risky and highly unprofitable gamble, in the face of what would likely be a robust strategic appetite that could yield significant advantages for investors? ”

Representatives for Penn Entertainment did not immediately respond to a request for comment Friday.

Penn Entertainment shares were up 18.7% to $17.36 as of 3:35 pm ET on Friday. However, even with Friday’s advance, they have lost about a third of their value by 2024.