Bally’s Corp. (NYSE: BALY) Showing Hand In $100 Million Bet For Penny Stock AESE
If there’s one thing we love writing about, it’s penny stocks. Other than the name, these cheap stocks are some of the most exciting to watch in the stock market today. When they hit, they hit big, and when they don’t, it can be a huge breakdown. It’s this volatility that keeps traders and investors coming back for more.
The pandemic was a dual-edged sword for markets and investors. In 2020, the coronavirus wrought havoc on the markets, sending shares of countless companies lower. We saw 3 year’s or more worth of gains erased. We also saw hundreds of companies that were never penny stocks end up falling well-below the $5 level. Furthermore, we saw plenty of these same companies either file for bankruptcy or go out of business altogether.
But from the ashes rose plenty of phoenixes. While the initial moves came from some of the most popular penny stocks with exposure to vaccines & testing, new trends began emerging. Everything from green hydrogen and alternative energy to companies leveraging interest in new entertainment types that were relatively suppressed before the pandemic. Social distancing rules and stay-at-home orders definitely changed the way we do things. Will that be permanent? Only time will tell. Now that vaccines are being distributed, some say the reopening trade will be the one to watch.
However, I’ve written about this idea many times before. What I can say is that personally, I believe the “reopening trade” won’t be as cut and dry as looking at the beaten-down stocks during the pandemic. It could be more of a hybrid that mixes the popular industries built up last year, along with the standard market sectors that would benefit on a broader scale. Essentially, I think we see the companies that built brands around social distancing benefit along with things like infrastructure stocks and travel stocks.
Penny Stocks & Heightened Interest
If you look at some of the most popular stock market trends today, it’s usually the penny stocks that experience a heightened sense of volatility. For instance, we had the big push behind electric vehicle penny stocks thanks to Tesla (NASDAQ: TSLA), followed by the Biden Administration’s push for alternative fuel and zero-carbon initiatives. While stocks like TSLA, NIO, and others grabbed early headlines, we were looking at the “obscure” penny stocks like SOLO, AYRO, and BLNK. Fast-forward to recent, and we see that many have now become more than penny stocks, trading much higher than $5.
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So what’s my point? In many cases, penny stocks carry higher risk due to speculation. However, it’s this speculation that can turn an “obscurity” into something with a bit more substance. Novavax (NASDAQ: NVAX) was just another penny stock company trying to develop a flu vaccine. It was a failing company, according to some accounts. The coronavirus’s onset turned the obscure biotech company into a formidable competitor in the hunt for a viable COVID vaccine.
Hype and speculation ended up turning into something much more, as we’ve seen. We also saw a scenario where hype turned failing companies into “something of substance” during the more recent Reddit hype. GameStop was being compared to Blockbuster; then we saw a surge with some of the biggest names in the investment world now supporting the failed video game retailer.
Bally’s Bets Big On Esports Penny Stocks
Now, is this the case with all penny stocks? Absolutely not. Nor should anyone think that this is always the case. But trading and investing in penny stocks are very different things. Short-term trends are usually “more reliable” compared to the longer-term outlook. Sure, the names I mentioned above were big winners and clear examples of how big a penny stock can become. But many other companies saw a short-term spike following by a drop shortly after.
Recently, we’ve been discussing esports and entertainment penny stocks. This niche gained more interest following a note from none other than Citron Research. In this case, however, the company known for its bearish stance on stocks gave a bullish outlook of sorts. The company suggested that for GameStop (NYSE: GME) to remain relevant, it would need to pivot to a digital model, and Esports was the target niche. Citron suggested that a company like GameStop would pair well to buy Esports Entertainment Group (NASDAQ: GMBL). This triggered a spark in most stocks with exposure to esports.
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You may recall the article from earlier in the week discussing penny stocks to buy according to top Wall Street analysts. In it, we talked about Super League Gaming Inc. (NASDAQ: SLGG), a frequent name on our list of stocks to watch. Maxim Group initiated coverage on Super League Gaming, giving a Buy rating on the company. The firm also set a $6 price target on the penny stock. What’s more, buyout rumors ended up sparking momentum later on in the week, triggering a strong rally in SLGG stock. As of Friday, the esports company is trading well-above $5.
$100 Million Reasons To Watch Esports Penny Stocks?
But I’m not talking about Super League. This morning one of the other popular penny stocks we’ve discussed got a boost of interest thanks to headlines involving Bally’s Corporation (NYSE: BALY). Yes, this is the same Bally’s that is plastered across Las Vegas. The company offered to buy Allied Esports (NASDAQ: AESE) for $100 million.
Now, if you’ve been following our discussion on the company, you may have concluded that there could be an issue with this deal. Allied had already agreed to sell one of its major assets, World Poker Tour®, for a cool $78.25 million to Element Partners, LLC. Furthermore, Allied was in the process of looking for “strategic alternatives” and potentially turning into an entertainment holding company.
This deal, if consummated, would require the company to terminate its previously announced agreement with Element Partners, LLC. There was no comment directly from management on the deal. But the company’s press release explained that its Board is recommending stockholders to approve the transaction with Element. So this deal may be a question mark in the interim. Now the clock starts ticking. If the deal with Element is approved, first, it’s expected to close on or about March 30th.
Regardless of this outcome, the offer made by Bally’s alone is another proof point that just because we’re talking about penny stocks, it doesn’t mean potential doesn’t exist. As this story unfolds, we’ll continue to bring any updates that might follow.
