Penn Entertainment Faces Setback with Wider Losses as New Sports Betting Platform Launches

Penn Entertainment, a prominent gambling and esports company, witnessed a significant decline in its stock value following the announcement of a larger-than-anticipated loss. The company's new sports betting platform faced challenges during its launch, reflecting in the unfavorable financial results.

Stock Plunges

During midday Thursday, Penn stock plummeted by 13% to $19.58, signaling investors' concerns about the company's performance.

Unexpected Losses

Penn reported a loss of $2.37 per share for the fourth quarter, well beyond Wall Street's projected loss of 54 cents per share. This sharp decline stands in stark contrast with the 13 cents per share earnings recorded during the same period last year.

Revenue Falls Short

The revenue generated by Penn amounted to $1.395 billion, falling short of Wall Street's forecast of $1.53 billion. This figure also marked a significant decrease compared to the $1.586 billion revenue generated during the previous year.

Impact of New Customers and Promotional Expenses

During the earnings call, CEO Jay Snowden highlighted that the launch of ESPN BET in November resulted in an influx of new customers for Penn. However, this increase in customer acquisition led to higher promotional expenses, ultimately causing a strain on net revenue. Additionally, the company faced reduced revenue due to customers winning sports bets.

Future Outlook

Next in line to announce its results is DraftKings, with their report scheduled after the market's closure on Thursday.