The ongoing outbreak of the coronavirus in China has wreaked havoc on a few big Las Vegas casino’s stock price. It actually forced the closure of casino properties in Macao earlier this month. A recent post on www.cnbc.com mentioned that those casinos have since reopened. That has to be good news for the three biggest Las Vegas gaming companies:
Can Top Casino Stocks Like Wynn, LVS & MGM Recover From The Coronavirus?
All three companies have heavy ties to Macao. Some like Wynn Resorts much more than the other two. Furthermore, this raises the question of ‘can the stock rebound?’ with gaming stock investors. There was a short spike in the stock price last Wednesday. Moreover, this follows the announcement that Macao would be back open for business as of Thursday, Feb. 20. Do you remember when we reported the story about an options trader making big bets on Wynn Resorts stock price Rebounding?
Mark Tepper is the president and CEO of Strategic Wealth Partners. He remains bullish that a return to business is ‘in the cards.’ His view on the current climate was:
“Gambling is addictive so there’s obviously going to be pent-up demand. And all of these gamblers missed out on the biggest time of the year which is the Chinese New Year. So they want to get out and gamble.
These comments were made last Tuesday on CNBC’s Trading Nation. Off the three Las Vegas companies, his top pick was Las Vegas Sands. His added comments were:
“I own and I like LVS. It’s a play on the Chinese consumer. This is a long-term play. The consumer in China is making more money, year after year. You have a true growing middle class in China. We have a strong middle class in the US, but it’s a mature middle class. So, yes, as a long-term play, I think the spending does come back. I think LVS is a good play.”
Las Vegas Sands currently derives 63 percent of its revenue from casino interests in Macao. Another 22 percent of revenue is generated in Singapore. Macao EBITDA is expected to be down 50 percent for March’s first-quarter report.
Bill Baruch is the president of Blue Line Capital. He believes it is still too early to properly assess the overall impact. His choice of the three was MGM Grand. The rational for this statement was expressed in his comments:
“I think there’s an attractive play here in MGM with sports gambling becoming legal here in the US. And some expansion there. I think MGM has a little bit of a lead there. There’s an uptrend line on MGM I’m looking at $28. All these stocks have held in very well given the recent news. But if we see another downdraft I’m looking at MGM at $28 and that’s’ where I’d look to be a buyer.”
MGM is still above this level in current trading. It would have to drop another 13 percent to reach the $28 level. The last time the stock traded this low was in October of 2019. These could all be considered unknowns since the coronavirus is still not under control in many Asian sectors.
