Penn Entertainment (NASDAQ: PENN) has been facing a challenging period, with a significant 35.39% loss in the past year. This has led to a decrease in market capitalization, causing the company to no longer qualify as a mid-cap stock.
Recently, S&P Dow Jones Indices announced that Penn Entertainment will be removed from the S&P MidCap 400 Index and will now be included in the S&P SmallCap 600 Index. This move is a result of the company’s declining market value and the increasing market caps of other companies in the small-cap index.
While this may seem like a demotion for Penn, there could be some silver linings. Small-cap stocks are often overlooked compared to larger companies, which could present new opportunities for investors. Additionally, fund managers tracking the S&P SmallCap 600 Index will now be required to buy shares of Penn, potentially offsetting some of the selling pressure from mid-cap managers.
It’s important to note that Penn’s history with index changes has been turbulent. After a brief stint in the S&P 500 in 2021, the company was eventually removed due to its ongoing slump. Now, ranked 383 out of 400 names in the mid-cap index, Penn holds a weight of just 0.097% in the gauge.
While the stock may have been downgraded to small-cap status, there could be potential benefits for investors in the long run. It will be interesting to see how Penn Entertainment navigates this transition and whether it can capitalize on new opportunities in the small-cap space.