Penn National Gaming (PENN 0.49%) shares were down over 8% this morning after the company announced a public offering of 14 million shares. The move comes after Penn National stock had run up 658% over the last six months.
The move seems strategic, as shares have had such an extensive climb that it gives the gambling company an opportunity to bolster its cash position. Shares have recovered somewhat throughout the day and seem primed to hold onto the current range. In all, the 14 million shares have the potential to raise around $1 billion in capital. Penn National gaming has lost over $800 million through the first two quarters of the year. The company carried $1.26 billion in cash at the end of June. With an additional $1 billion capital raise, the casino company will have a strong cash position that can be used for the build-out of its partnership with Barstool Sports, as well as any other corporate activities.
With the commencement of fall sports, which were largely in doubt for a while, a huge revenue stream has been opened up for the developing sports-betting market. Names like Penn National Gaming, DraftKings (DKNG -2.57%), William Hill (OTCMKTS:ODYPY) etc, are all embroiled in a young market that is purportedly creating big revenue gains weekly as the NFL season has begun. The Barstool Sportsbook, Penn National's window into online sports betting, reportedly had more daily downloads in its first weekend than the records of both DraftKings and FanDuel. The capital raise could help add fuel to the situation.