The ESPN Bet app on a smartphone on Thursday, February 22, 2024, in New York, USA.
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penn entertainment corp. About 100 employees will be laid off to focus on ESPNet's growth.
Chief Executive Jay Snowden told employees in an internal email that the changes will improve operating efficiencies following the 2021 acquisition of Canadian media and gaming giant theScore.
The company has approximately 20,000 employees.
“When PENN acquired theScore, we began work on building out our proprietary technology stack and migrating our sports betting to theScore's best-in-class platform,” Snowden wrote in the memo seen by CNBC. “This resulted in us temporarily Any potential organizational changes that typically follow a major acquisition were put on hold.”
Penn went on to say that its interactive business is entering a new phase of growth, including ESPNBet, a $2 billion brand partnership, disney ESPN. Snowden said the moves include product enhancements and deeper integration into ESPN's ecosystem.
Investors are eager for Penn State to flex its muscle with a rebranded sportsbook, and activist investor Donerail Group has called on the board of directors to sell the casino company.
Rumors are rife about potential interest from multiple other online gaming and land-based casino companies.
Truist gaming analyst Barry Jonas wrote in a note Thursday that a sale is unlikely in the short term due to the complexity of the deal, which could involve significant divestitures.
Jonas said the new ESNBet features Penn State is releasing during this fall's football season should meaningfully improve its product, and the focus on cost shows the company is committed to seeing return results on its investment.
Penn shares have plunged 25% so far this year. The company has missed profit forecasts for the past two quarters and lowered its guidance.
“Investors still want to know what success for ESPN Bet will look like and how much investment (beyond guidance) will be needed to achieve it,” Jonas noted.
Truist has a Buy rating on Penn with a $25 price target.