Casino stocks decline on Omicron, closure fears, after last week’s rebound

Less than a week after the casino stocks pocketed in some gains from the possibility of new Macau licenses, the most popular companies are back on the downward slide. The ever-increasing numbers of COVID cases throughout the world have dampened the recent enthusiasm about the land-based casino stocks.

Last week both Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS) were up nearly 3% on the news that China is looking to deliver some stability in Macau, the only place in China where gambling is legal, and a place where some of the US casino stocks have a large footprint. Gambling licenses on the enclave are set to expire next summer and China is working towards business continuity in that sphere, with not only renewals of those licenses, but with the possibility of some new gaming entrances in 2022. This news was enough to drive the shares of the big Macau players up. Albeit is was short lived.

While the market is generally enjoying a rebound from the one-day Omicron related slump, the gaming companies are not the beneficiaries of it. The general stock market is breaking records daily, but the casino stocks are going down, along with pretty much the entire leisure sector, especially the cruise lines.

Shares of MGM Resorts International (MGM) closed on Monday after Christmas down 1.16% at 45.21 and lost another half a point after hours. The company, one of the world’s most famous casino owner, will likely close the year in a much better position, compared to 2020. Year to date, the shares of MGM are up over 43%. At this point we’ll have to wait for the yearly report to find out what part of the $8+ billion revenue is due to their entrance into the online gambling market. But it will certainly be proven to be a great money maker for the casino company, more famous for its Las Vegas properties. Regardless, MGM remains the most stable casino company on the market.

Wynn Resorts was another casino operator which saw shareholders take some money out of the market. Shares of Wynn declined nearly 1.5% on Monday alone, with another 0.35% down after the market close. With a 52-week high of $143.88, Wynn Resorts shareholders can’t be happy with a stock price hovering around the mid $80, never breaking over $100 since August. Analysist are blaming the Omicron variant on the slump of the shares, but another point that must be made is that Wynn is generally behind on the push to online gambling.

Las Vegas Sands market the biggest drop in stock price after the Christmas holidays, dropping 1.87% on Monday, with a negligible rebound after hours. The shares of the company have been seesawing all month long, seemingly affected by news more than any other of the big casino companies. Swings of more than 3% were a norm this month, whether on the up by the Macau regulations or down on the Omicron variant. Holders of LVS are likely among the unhappiest this year, with a stock price YTD change of -36.46%.

If one should take anything out of the casino stock prices this year, it must be the fact that they will be one of the more speculative holdings in the months to come, until the COVID situation is resolved in some way. One way r another, the ones giving online gambling a serious push will likely come out the winners.

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