- Wynn Resorts (WYNN) down 10%
- Las Vegas Sands (LVS) down 11%
- (grand prize to) MGM Mirage (MGM) down 21%
- Casino operator Wynn Resorts Ltd (WYNN) said on Thursday it would increase its share buyback program by $500 million, and its stock jumped nearly 15 percent in extended trade.
- In a statement, Wynn said the new buyback program would come on top of a previously announced $1.2 billion repurchase plan.
- Separately, Wynn said second-quarter operating income for its Las Vegas casino, on a GAAP basis, would be between $18 million and $22 million. That is down from $63.4 million in the same period last year.
- Wynn's Las Vegas casino has drawn fewer consumers to the resort as current U.S. economic woes such as the declining home market and higher gas prices have forced Americans to cut discretionary expenses.
But let's look at the bigger macro picture - a theme we've discussed many times here. (We're early) And it's getting worse by the month. Thankfully we are not in a 'technical recession' or anything.
- Casino stocks were battered again Thursday, with shares of the big players scraping to multiyear lows on the back of news of a precipitous drop in Nevada's gambling revenue.
- Statewide, gambling revenue in May slumped 15%, with a roughly similar pace of decline in table games and slot machines alike. Things were even worse on the Las Vegas Strip, where total gambling revenue fell 16.4% -- the largest decline yet in 2008, and one that is at an increasing rate as quarter-to-date revenues for the Strip are off 9%.
- "The decline in Strip revenues is worse than the period immediately following Sept. 11, 2001 and except for January 2002 is the worst monthly performance in more than 10 years," analyst Robin Farley of UBS wrote in a research report. "The weakness in gaming revenues was not confined exclusively to the Strip as the Las Vegas locals market declined 19.5% in May, bringing year to date revenues down 8.7%
- By way of contrast, last fall MGM shares cracked $100 at one point; Sands was nearly $150; Wynn traded above $176 (some of the best shorts outside of financials - unfortunately for me there is no Ultrashort Casino ETF)
- He sees no immediate end in sight either: "We are recommending that investors avoid the Las Vegas-centric stocks as it appears that market is performing worse than some of the regional ones. People are just staying closer to home."
- "Despite efforts to disguise discounting on the high end, many of Las Vegas' luxury resorts are slashing rates" as well as offering additional lures including meal credits, free play and even airfare and gasoline rebates.
- (for Wynn) In Macau, however, operating income is expected to be in the range of $100 million to $106 million, compared with $53.2 million in the year-ago period, the company said.
No position but would of been short if I could (but covered earlier than this for fear of dead cat bounces)
2 comments:
funny stuff here. was just talking with a friend how we wanted to short WYNN but it had been pummeled recently and so to stay disciplined we had to wait for a pop. literally a few days later we get the 15% surge after hours on the buyback/earnings pre announce. that was a gift to short into.
shorted at the open and wynn is giving nearly all of that 15% back. i really do think that steve and his team were trying to save their stock/screw shorts over here... i mean why else come out right this second with that info.
agreed though that the bounce is veeeery concerning. tight trailing stop on this for sure and actually looking forward to a much bigger bounce to short into.
thoughts on shorting wynn vs lvs considering wynn is technically 'higher end'? risk/reward in lvs didnt intrigue me simply because its really rolled over and tanked so much already.
I'm more of a fat pitch guy, and not very good at that intraday shorting or stuff like that. I like the easy stuff - I told BD on his blog LVS was a short a few months ago (he was long and made money in a quick daytrade or swing trade - lucky dog)
I'd probably have covered a week ago fearful of a bounce against me. But mid 70s to mid 40s is more my trade. From here on out people are simply pressing their bets and yes there is money to be made, but its not where I excel. As long as you have that trailing stop you can do anything, but as I often write I try to take the middle of the trades and let others work the extremes where risk/rewards are higher I suppose. Just a stylistic difference and people make money in many different ways. The plus for you is usually the biggest move is at the tail end of a drop or rise (and then comes the reversal)
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