Regional gaming giant Penn Entertainment (PENN -1.92%) reported fourth-quarter 2023 financial results and the market didn't like what it saw. Shares fell as much as 15.8% in trading on Thursday and were still down 14.2% at 2:30 p.m. ET.
The terrible quarter
Revenue fell from $1.59 million a year ago to $1.40 billion, and Penn Entertainment lost $358.8 million, or $2.37 per share. Most of the revenue drop was related to the sale of Barstool and losses related to relaunching an online betting business under the BetESPN brand.
On top of those major changes, revenue was down in the Northeast and South segments, and overall the gaming business was down slightly for the quarter.
This highlighted the challenge for regional gaming companies like Penn National as gaming shifts to major entertainment hubs like Las Vegas. With online gaming competition heating up, the small revenue of $31.5 million with an adjusted EBITDA loss of $333.8 million is a terrible start for Penn Entertainment.
Missed opportunities
The problems for Penn National go back to the pandemic, when the company made a deal to acquire Barstool. That made it a pandemic darling stock, but operations never lived up to the hype.
Now, management is paying for those decisions after selling Barstool for essentially nothing to David Portnoy and having to sign a major deal with ESPN to rebuild the online gambling business. The missteps are compounding.
I don't see any upside for Penn Entertainment in the current environment and would be looking to the heart of Las Vegas for betting gaming stocks.
