Vegas Gaming Stock Values Decline in 2018

Despite looking quite good on the surface, the American gaming industry hasn’t had as stellar a year as meets the eye – in fact, it was less than overwhelming if you ask Las Vegas gaming firms.

In 2018, the aggregated stocks value in most Vegas gambling companies plummeted by 30% on annual level…

…This is explained by investors’ fears over the announced recession, stock market instabilities and the ongoing trade war on a relation USA – China.

Bad News For Business

The reports suggest that value of Dow Jones US Gambling Index which lists Vegas’ top gambling companies has declined by 33 percent over the course of the last 12 months. This is the worst financial result the gaming industry has recorded since 2008’s recession.

Dow Jones Industrial Average Index dropped by 5.6% year-on-year, which puts the gaming industry in an even worse state of affairs comparatively.

Looking at individual companies, the biggest loser of the year is Scientific Games, whose shares are 65% less worth than what they used to be one year ago. International Game Technology is close behind, with a 43% drop in shares’ value.

Good Start, Poor Ending

2018 kicked off with a promising vibe for American gaming with corporate income tax cuts imposed by President Trump. These cuts provided a massive financial benefit to Wynn Resorts and Las Vegas Sands in particular, with both responding with $340 million and $526 million in revenue, respectively.

However, the expected overall growth never came – in June, Trump administration began the trade war with China by imposing import duties on all the goods manufactured by Asian giant, to a total of $34 billion…

…Similar actions were undertaken by the government in Beijing as retaliation which led to a lower GGR in Macau – a gambling hub where numerous Las Vegas operators, including Wynn and LV Sands, do their business by running massive casino resorts.

Immediate Impact

A month later, Las Vegas Sands’ shares are 22% less worth than they were in January 2018…

…Whereas Wynn Resorts Limited took an even harder blow – their shares are worth only 44% of last January’s value! Another Vegas operator, MGM Resorts International, also saw a sharp decline, with the company’s shares dwindling by 26% and hitting a two-year low point.

Strictly home-bound issues are faced by Caesars Entertainment whose 46% slump in shares value is relating to annual revenue decline on Vegas Strip.

UBS Group AB financial analysts Arpine Kocharyan and Robin Farley comment:

“The top ten China provinces by visitors to Macau had combined about $294 billion of exports to the United States in 2017, so we believe the trade war could hurt consumer and business confidence of players coming from key source markets in China.”

A Glimmer of Hope on the Horizon

However, according to Credit Suisse Group AG’s Cameron McKnight, stocks’ value of Las Vegas gambling companies should see a dramatic improvement this year…

…for, as he explains, “a positive domestic gaming in 2019, a good consumer backdrop and pockets of defensive exposure if a recession is more likely.”

Source:

“Most Las Vegas gambling stocks saw big drops in 2018”, Todd Prince, reviewjournal.com, December 31, 2018.

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