The past twelve months have reportedly seen the aggregated value of stocks in the majority of Las Vegas-based gaming firms decline by over 30% year-on-year as investors wrestled with fears of a looming recession and issues surrounding the United States’ ongoing trade war with China.
According to a Monday report from the Las Vegas Review-Journal newspaper, the value of the Dow Jones United States Gambling Index, which includes the city’s top publicly-listed firms involved in gaming, decreased by some 33% over the course of 2018. This fall represented the local gambling industry’s worst performance since the Great Recession a decade ago and compared to a 5.6% year-on-year drop for the nation’s more comprehensive Dow Jones Industrial Average Index.
Feeling the heat:
The newspaper reported that Scientific Games Corporation topped the list of local losers with its shares currently worth around 65% less than a year ago. Rival gaming machines innovator International Game Technology (IGT) also purportedly felt the heat as its stock value fell by approximately 43% over the course of 2018.
The Las Vegas Review-Journal reported that American gaming stocks had begun 2018 on a high thanks to a range of personal and corporate income tax cuts initiated by President Donald Trump. These purportedly saw casino operators Wynn Resorts Limited and Las Vegas Sands Corporation immediately benefit to the tune of about $340 million and $526 million respectively while additionally raising hopes that overall economic growth would soon accelerate.
Trade war troubles:
However, this optimism was reportedly short lived as July saw the Trump administration impose import duties on goods manufactured in China totaling some $34 billion. This trade conflict soon accelerated following comparable retaliatory moves from Beijing and has purportedly led to lower aggregated gross gaming revenue growth in Macau where both Wynn Resorts Limited and Las Vegas Sands Corporation operate large integrated casino resorts.
As a result, the newspaper reported that shares in Las Vegas Sands Corporation are currently worth 22% less than they were in January of 2018 while Wynn Resorts Limited has seen its share value plummet by an even more alarming 41% year-on-year. The ongoing quarrel has purportedly moreover adversely impacted MGM Resorts International, which is responsible for Macau’s MGM Cotai and MGM Macau venues, as the value of its shares has fallen by around 26% over the course of the last twelve months to hit a two-year low.
Macau revenue slump:
Arpine Kocharyan and Robin Farley, analysts for financial services firm UBS Group AB, reportedly used a December 5 note to detail that the first four months of 2018 had seen Macau record aggregated gross gaming revenue growth of about 22% year-on-year. But, the pair purportedly explained that this rate had subsequently fallen to stand at only around 9% for the seven months from May.
Arpine and Kocharyan’s advice reportedly read…
“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.”
Local issues bite:
Closer to home and the Las Vegas Review-Journal reported that shares in Caesars Entertainment Corporation are now worth 46% less than a year ago largely due to an annual decline in revenues from its operations on the Las Vegas Strip and a recent series of federal interest rate hikes. Similar issues have purportedly seen the value of shares in rival casino operators Red Rock Resorts Incorporated, Penn National Gaming Incorporated and Boyd Gaming Corporation descend by around 40% year-on-year although Eldorado Resorts Incorporated, which is responsible for 28 gaming venues across the United States including the Tropicana Atlantic City, bucked this trend to record a 9% rise.
Despite this recent news, Cameron McKnight from financial services firm Credit Suisse Group AG, reportedly used a December 20 note to declare that the overall value of stocks in Las Vegas-headquartered gaming firms is likely to improve this year due to predictions of rising convention attendance alongside a stable number of special events.
McKnight’s advice reportedly read…
“We are positive on domestic gaming in 2019, given underperformance, a good consumer backdrop and pockets of defensive exposure if a recession is more likely.”