David Portnoy, the founder of the sports media platform Barstool Sports, posted a bed-ridden video Wednesday on social media, saying he was sick, possibly with coronavirus. The news sent the share price of casino operator Penn National Gaming down as much 2.5% in trading.
Penn National, which owns 36% of Barstool and is developing a mobile sports betting app and online gaming product with the company, closed Wednesday at $54.73 on the Nasdaq, down 65 cents or 1.17%. Earlier in the day, before Portnoy’s video, Penn hit a 52-week high of $56.96.
Shares of Penn fell to $3.75 in March during the outset of the COVID-19 pandemic but have battled back in value over the last few months. The company operates 41 casinos and racetracks in 19 states and was only recently supplanted as the nation’s largest regional casino operator by Caesars Entertainment.
Penn spent $163 million on the Barstool investment earlier this year, and much of its prospective future growth is tied to the media company. Barstool boasts some 66 million followers on various social media channels. Penn also plans to brand its retail sportsbooks as a Barstool product, seeking to change and increase the customer make-up of its casino business.
But Penn executives are quickly learning that Portnoy, who can be polarizing with both his comments and his online persona, has the ability to move the stock price with a short video.
After COVID-19 canceled sports and Barstool altered its programing, Portnoy developed a loyal following through his day trading in the stock markets. His live stream shows have been viewed by millions of his followers. Portnoy tweeted last week about his interest in cryptocurrency.
In his short video, titled, “Emergency press conference: Cult leaders don’t die from COVID,” Portnoy said Wednesday he hadn’t left his bed in 40 hours.
“Do I have COVID? Maybe,” he said, adding he may have fought the disease “eight” times. “I’m just going to get better, so I can come back and do what I do, which is to entertain you.” After Penn’s stock price fell, he posted a link to a news story with the hashtag, #stillhere.
During a private investors conference Monday, hosted by Truist Securities gaming analyst Barry Jonas, Penn National CEO Jay Snowden was asked about managing Portnoy and his controversial persona.
In June, Portnoy publicly criticized another gaming analyst, Deutsche Bank’s Carlo Santarelli, over comments he made about the Barstool deal with Penn. Last month, Portnoy scored a highly favorable interview at the White House with President Donald Trump, a video of which was posted to the Barstool website.
Snowden, according to a transcript of the call, pointed out that Barstool has remained active during the pandemic and is producing programming that continues to attract its followers, often called “stoolies.” He noted Barstool has grown from 12 employees to more than 200 “highly diverse” employees in the four years since Erica Nardini became CEO. Barstool’s executive team is made up of 75% women.
“It’s a very diverse company and so I took a lot of stock in looking at their actions, not just a video clip from seven years ago or 12 years ago that maybe was controversial and I personally don’t agree with,” Snowden said.
He called Portnoy an entertainer and a comedian who has sometimes tried at a joke that “didn’t hit the mark.”
Snowden said Penn “created guardrails that Barstool is comfortable with around responsible gambling and responsible drinking and things of that nature. I look at the company that they’ve evolved into and what they are today and how seriously they take their brand and their brand image and we got very comfortable with the company and we couldn’t be more proud to be their partners today and going forward.”
Snowden said the Barstool app should launch in Pennsylvania in September, followed by Michigan in October. Other states – New Jersey, Indiana, Illinois, Iowa, West Virginia, and Colorado – will see the app launch in early 2021.
Jonas, in a research note following the meeting with Snowden, said the Barstool deal will allow Penn to reduce its costs at acquiring customers and focus more efforts on customer retention. He noted that Barstool’s audience is loyal to products endorsed by the media platform.
“(Penn) management specifically emphasized the impressionability of the Barstool database, noting that E. & J. Gallo has seen more sales of its High Noon spiked seltzer drink since entering into a marketing agreement with Barstool than the three years combined prior to the agreement,” Jonas told investors.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
