Las Vegas’s Asian Counterpart Sinks Stock Prices

Written by:
Guest
Published on:
Jul/03/2018

Las Vegas is often referred to as the gambling capital of the world. However, when it comes to real money gambling halfway around the globe, Macau, China would take those honors as the “Las Vegas of Asia”.

The Las Vegas casino giants in the gambling industry have financial interests in both regions with the value of their company stock riding on revenue returns as a whole. In a recent post on the CNBC website by Gillian Brassil, it was noted that missed revenue projections in Macau for the month of June have had a ripple effect on stock prices. Even though Macau casino gaming revenue was reported to be up 12.5 percent for the month on a year-by-year basis to over $2.78 billion, this was well below the anticipated gains in the range of 17 to 21 percent. It is reported that Wynn Resorts and Las Vegas Sands generate greater than 50 percent of their revenue from their business interests in Macau. MGM Resorts International’s figure is much lower at 21 percent. The missed revenue projections for June took their toll on stock prices for these giants when the earning reports were released on Monday. Investors never like to hear that earnings are “weaker-than-expected” no matter how high the actual gains may have been.

According to Macau’s Gaming Inspection and Coordination Bureau, the revenue for June came in at close to $3 billion to post a healthy 12.5 percent gain, but when you are expecting to make much more than that, it starts to make investors nervous. Analysts who were recently polled by Reuters set the bar for June much higher to that projected mark of 17 to 21 percent gains. Shares of Wynn Resorts tumbled 7.89 percent to $154.14 per share in the wake of these earning reports, which was its worst drop since late January when stock prices fell almost 10 percent. Las Vegas Sands and MGM Resorts International stock lost 6.67 percent of value on the negative news. The Sands’ stock closed at $71.27 and MGM’s stock price fell to $28.16 according to the CNBC report.

When you put these percent losses into dollar figures, the value of Wynn Resorts’ share price lost $13.20 based on its closing price. Las Vegas Sands’ stock suffered a $5.09 loss per share and MGM’s loss of value was $0.87 on a much lower share price.
 

It is still safe to say that real money gambling in Macau is as popular as ever with 23 straight months of revenue gains. However, this report is quick to point out that revenue in general for the year is lower than it was five years ago. The overall downturn could be attributed to reduced economic growth in the region. Another contributing factor was a gaming industry corruption probe that was initiated in 2014.  This situation is sure to be monitored closely in the coming months by investors given just how much Macau casino revenue means to companies such as Wynn and Las Vegas Sands. MGM’s stock price should be a bit less volatile given its smaller reliance on revenue from that region.

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