What happened

Shares of Penn National Gaming (NASDAQ:PENN), a major casino operator, fell 15% in April, according to data from S&P Global Market Intelligence. That continues a decline that started on March 15, which has seen the stock lose slightly more than a third of its value.  

So what

The interesting thing here is that there hasn't been much in the way of negative news about Penn National Gaming over this span. In fact, the most notable update was that it got approval to expand its online sports-betting business into Virginia -- clearly a positive. It even got some upgrades from Wall Street analysts during April, which would normally suggest higher share prices, not lower.  

A gambling table with dice and chips on it.

Image source: Getty Images.

The likely problem here requires a look even further back. Between April 2020 and March 2021, Penn National's stock was up a massive 960%. At one point over that span, the shares had gained 1,200%! Either of those numbers represents a massive price advance. So when you put the current pullback into the broader context of a huge yearlong rally, the sell-off in April (and, going back just a bit, since the middle of March) doesn't seem so odd.  

Now what

Long-term investors should probably tread with caution here. It's not that Penn National Gaming is a bad company; it's just that after such a massive price move, it really isn't a shock to see investors wanting to take some profits. So unless there's a catalyst to bring new investors in, this gaming stock could continue to face headwinds given that a lot of good news has been priced into the shares over the past year or so. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.